**Summary:**
This circular, issued by the Securities and Exchange Board of India (SEBI) on July 28, 2022, pertains to an addendum to the SEBI circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022, concerning the development of passive funds. Specifically, it addresses clause 2(IV)(a) of the aforementioned circular, which stipulated that direct transactions with Asset Management Companies (AMCs) for Exchange Traded Fund (ETF) units would be facilitated for investors only for transactions exceeding a threshold of INR 25 Cr. Based on stakeholder feedback regarding implementation challenges, SEBI has decided to postpone the applicability of clause 2(IV)(a) from July 01, 2022, to November 01, 2022. This circular is issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 77 of SEBI (Mutual Funds) Regulation, 1996, to safeguard investor interests and promote the development and regulation of the securities market. For further information, contact Manaswini Mahapatra, General Manager, at 022-26449375 or via email at manaswinim@sebi.gov.in. The circular is addressed to Recognized Stock Exchanges, Clearing Corporations, Depositories, Custodians, Mutual Funds, Asset Management Companies (AMCs), Trustee Companies/Boards of Trustees of Mutual Funds, Registrar and Transfer Agents (RTAs), Stock Brokers cum Market Makers, and the Association of Mutual Funds in India (AMFI).
Key Entities Referenced
SEBI Mutual Funds Regulation, 1996: Regulations pertaining to mutual funds as stipulated by SEBI.
Securities and Exchange Board of India: Regulatory body for the securities market in India.
SEBI Circular No. SEBIHOIMDDOF2PCIR202269: SEBI circular dated May 23, 2022, concerning the development of passive funds.
Passive Funds: Investment funds designed to track a market index or follow a specific investment strategy passively.
Exchange Traded Funds (ETFs): A type of investment fund traded on stock exchanges, similar to stocks.
Asset Management Companies (AMCs): Companies that manage investment funds.
Association of Mutual Funds in India (AMFI): An association of all AMCs in India.
Securities and Exchange Board of India Act 1992: The act that established the Securities and Exchange Board of India.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/DF2/CIR/P/2022/102 July 28, 2022
To
All Recognized Stock Exchanges/
All Clearing Corporations/
All Depositories/
All Custodians/
All Mutual Funds/
All Asset Management Companies (AMCs)/
All Trustee Companies/ Boards of Trustees of Mutual Funds/
All Registrar and Transfer Agents (RTAs)/
Stock Brokers cum Market Makers/
Association of Mutual Funds in India (AMFI)
Dear Sir/ Madam,
Subject: Addendum to SEBI Circular on Development of Passive Funds
1. This has reference to SEBI circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated
May 23, 2022 on “Development of passive funds”. The provisions of the said
circular are applicable with effect from July 01, 2022.
2. Clause 2(IV)(A) of the aforesaid circular prescribed that in respect of units of ETFs,
direct transaction with AMCs shall be facilitated for investors only for transactions
above a specified threshold of INR 25 Cr.
3. Subsequently, feedback was received from stakeholders expressing certain
challenges with respect to implementation of the above clause. Considering the
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Securities and Exchange Board of India
same, it has been decided that the applicability of clause 2(IV)(A) of the circular
shall be November 01, 2022.
4. This circular is issued in exercise of the powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act 1992, read with the provision of
Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
Yours faithfully,
Manaswini Mahapatra
General Manager
Tel no.: 022-26449375
Email: manaswinim@sebi.gov.in
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