Readings: SEBI on close-ended funds, FinTech bond exchange, Alternative paths to India
- Economic Times: SEBI may scrap initial charges for close-ended MFs
Market regulator SEBI is likely to prohibit close-ended MFs from charging up to 6% of the corpus as initial offer expenses, which is then amortised over a period of time.
For example, if you buy 100 units of Rs 10 each of a new close-ended fund, the fund house charges 6% as initial expenses, which means that the NAV should be Rs 9.40, but it is still shown as Rs 10 initially. The Rs 6 charged to the scheme is amortised over a period.
Against a 2.25% entry load available in the case of open-ended schemes, an AMC can appropriate as much as 6% of the corpus raised by close-ended schemes for advertising and other related upfront expenses, which is not immediately reflected in NAV.
- Business Standard: Financial Tech to set up corporate bond exchange
Financial Technologies, which recently got the government approval to set up an energy exchange, is now planning an exchange for illiquid corporate bonds.
According to the Securities and Exchange Board of India (Sebi) data, trading in corporate bonds, including over the counter trades and trading through exchanges, stood at Rs 53,664.26 crore between January and August.
. . . economy’s strong performance is leading many global investors to enter the domestic markets through an increasing number of channels, including financial derivatives . . . private equity (PE) is one of these channels, and accounts for a greater share of capital inflows each day, with much of it “targeting real estate-related investments”.
The third way is through the currency market. Onshore, the rupee forward market is only available for hedging commercial transactions. Foreign investors interested in an outright currency or interest rate view, can transact through the forwards and interest rate swaps markets, where liquidity is provided by foreign banks and Indian offshore accounts.
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