The Hindu : SEBI allows MFs to trade in derivatives

Online edition of India's National Newspaper
Thursday, Jan 02, 2003

Business

Business

SEBI allows MFs to trade in derivatives

MUMBAI JAN. 1. The Securities and Exchange Board of India has allowed mutual funds to trade in derivative products to offset the potential losses from the cash market positions.

The MFs may also deal in derivatives for rebalancing when a particular portfolio position could be achieved more efficiently or at lower cost rather than trading in the cash market, SEBI said in a communication to the Unit Trust of India , the Association of Mutual Funds in India (AMFI) and mutual funds today.

The SEBI's Advisory Committee on Derivatives has clarified that certain transactions could be done for hedging and portfolio balancing purposes. The market regulator had concerns over the effectiveness of the hedge and their deal size to cover for risks, it said.

PTI

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