In a move to add depth and variety to India's investment landscape, the Securities and Exchange Board of India (SEBI), in its board meeting, announced the introduction of a new asset class: Mutual Funds Lite (MF Lite). This new investment product aims to provide investors with a professionally managed and well-regulated option for higher ticket size investments. The relaxed framework for entities launching passive mutual fund schemes includes hiving off passive schemes to a different group entity, while brokers can offer access to a new settlement cycle allowing same-day trades for select top 500 scrips.
SEBI's New Initiatives: Mutual Funds Lite and Enhanced Brokerage Framework
Background
The Securities and Exchange Board of India (SEBI) is the regulatory body for the Indian securities and capital markets. It plays a crucial role in protecting the interests of investors, regulating the financial markets, and promoting the development of the Indian economy.
Mutual Funds Lite (MF Lite)
In a bid to enhance investment options and cater to the growing demand for higher ticket size investments, SEBI has introduced Mutual Funds Lite (MF Lite). This new asset class aims to provide investors with a well-regulated and professionally managed investment product.
MF Lite schemes will be structured as passive funds, which track a specific index or benchmark. This approach reduces the need for active management and lowers the expense ratio for investors. The minimum investment limit for MF Lite schemes has been set at INR 50,000.
Enhanced Brokerage Framework
SEBI has also implemented changes to the brokerage framework for passive mutual fund schemes. Entities launching such schemes can now hive off passive schemes to a different group entity. Additionally, brokers can now offer access to a new settlement cycle that allows same-day trades for select top 500 scrips.
Top 5 FAQs
Q1: What is the purpose of Mutual Funds Lite? A: MF Lite aims to provide investors with a well-regulated and professionally managed investment option for higher ticket size investments.
Q2: How do MF Lite schemes differ from traditional mutual funds? A: MF Lite schemes are structured as passive funds, which track a specific index or benchmark. This approach reduces the need for active management and lowers the expense ratio for investors.
Q3: What is the minimum investment limit for MF Lite schemes? A: The minimum investment limit for MF Lite schemes has been set at INR 50,000.
Q4: What are the changes to the brokerage framework for passive mutual fund schemes? A: Entities launching passive mutual fund schemes can now hive off passive schemes to a different group entity. Additionally, brokers can offer access to a new settlement cycle allowing same-day trades for select top 500 scrips.
Q5: What are the potential benefits of these SEBI initiatives? A: These initiatives are expected to enhance investment options, promote financial inclusion, and boost market liquidity.
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