“Upon consideration of the subsequent representation received from AMFI regarding operational challenges, it has been decided to extend the date of applicability of the .. ..provision to February 1, 2021,” Sebi said in a circular. The rule was to be effective from January 1,2021.
The regulator has also allowed a fund manager to authorise an employee of the asset management company to place an order on his behalf provided the order instructions is given through an electronic mode including an email and an audit trail is maintained.
At present, asset management companies are required to use an automated order management system (OMS), wherein the orders for equity and equity related instruments of each scheme should be placed by the fund manager of the respective schemes.
“The employee placing the order shall be bound by the same requirements of maintaining confidentiality and the code of conduct as applicable to the fund manager in this regard i.e. in respect of order placement,” Sebi said.
The regulator also said, the orders in case of arbitrage transactions, stock lending and borrowing transactions, passive schemes (such as Index Funds and ETFs) and schemes investing primarily based on pre-defined rules and models, where the discretion of the fund manager is not required for placement of order, is not mandated to be placed through OMS.
However, asset management companies would have to demonstrate that no judgement and discretion of the fund manager is required for placement of such orders.
