The Securities and Exchange Board of India (SEBI) on Wednesday made it compulsory the listing of units of schemes being wound up, giving investors of schemes in Franklin Templeton Mutual Fund (FTMF) an another route to access liquidity if they don’t wish to wait for receipts from portfolio investments.
In a circular issued on Wednesday, SEBI said: “In terms of Regulation 31B(1) of the MF Regulations, the units of Mutual Fund schemes can be listed in the recognised stock exchange. Accordingly, the units of Mutual Fund schemes which are in the process of winding-up in terms of Regulation 39(2)(a) of MF Regulations, shall be listed on recognised stock exchange, subject to compliance with listing formalities as stipulated by the stock exchange.”
However, it is not mandatory for the investors to trade or sell their units. “Pursuant to listing, trading on stock exchange mechanism will not be mandatory for investors, rather, if they so desire, may avail an optional channel to exit provided to them,” the SEBI circular said.
Experts also say SEBI’s move could also help in creating a market, where investors can get some access to liquidity even in stressed debt portfolios.
“Investors might have to deal with issues like not finding buyers for units of wound up schemes, as most of these scheme have low rated instruments. The requirement of having demat account to buy such units makes it a bit unattractive for small investors. Nonetheless, it is good that there is an option,” Rushabh Desai says.