The Securities and Exchange Board (Sebi) resumed the cut-off time for equity mutual fund purchases. It would be back to 3 pm effective from 19 October. Market regulators to mutual funds communicated and told about this. However, for debt funds and conservative hybrid funds, the truncated cut-off time will continue as usual. Mint on Thursday reviewed a copy of the Sebi communication to mutual funds. The Securities and Exchange Board (Sebi) is the regulator of the securities and commodity market in India owned by the Government of India.
Sebi has to take care of the needs of three groups constituting the market:
- issuers of securities
- market intermediaries
Sebi Decided This As Pandemic Affected Timings :
Sebi, forgetting the net asset value(NAV) of the same day, had brought forward the cut-off time for schemes other than liquid and overnight from 3 pm to 1 pm. This was happening from April after COVID-19 entered the country. At that time there were so many disruptions to financial services too. The cut-off time for liquid and overnight schemes was changed from 1:30 to 12:30 pm. Hence, the prevailing pandemic is also a reason.
Sebi said, ” For debt schemes and conservative hybrid fund the cut-off timings may be continued till further notice by RBI (Reserve Bank of India) on the truncated market hours.” This means that there would be no change in the timing of conservative hybrid funds as well as debt schemes. In April, RBI had also shortened and restricted trading hours of debt and currency market to between 10 am to 2 pm.
Association of Mutual Funds in India (AMFI) also represented this restoration in the timings for equity mutual fund purchases and redemptions. Sebi’s decision follows this representation. The changes restored are also confirmed by Nilesh Shah, chairman of AMFI through his tweet on Thursday.
Benefits of Active-Investors by This Action :
Chief Financial planner of SRE, Kirtan Shah talked to the media yesterday. He said, “For active investors, this action may help as the cut-off time and market close time are now around the same time. Please note here that the closing time for the market is 3:30 pm. So, this could help investors to make a better judgment.”
Previously, if an order is placed before 1 pm, it will take into account the same day’s NAV. If the order is placed after the 1 pm line, NAV of the next day would be applicable. In order to get the same day’s NAV, the cut-off timing for all mutual funds was advanced from 3 pm to 1 pm.