The Securities and Exchange Board of India, (SEBI) on July 01, 2024, issued a Consultation Paper for the introduction of Mutual Funds Lite Regulations (MF LITE) for passively managed Mutual Funds Schemes.
The objective of this consultation paper is to seek comments and views from the public on the proposals related to the introduction of a relaxed regulatory framework in the Mutual Funds (MF) segment viz, “the MF Lite Regulations” for the passively managed MF schemes. Considering the lesser risk inherent in managing passively managed MF schemes, the proposed MF Lite Regulations intend to reduce the compliance requirement, foster innovation, encourage competition and promote ease of entry for the MFs interested in launching only passive schemes.
Under the proposed framework, MFs desirous of managing only passive schemes shall be covered under the MF Lite Regulations. However, there may be MFs existing as of date, who may opt for management of both active and passive schemes under their existing registration. Hence, to ensure uniform applicability of proposed relaxations and to provide a level playing field across all passive MF schemes, a two-pronged approach has been adopted in this consultation paper, i.e.
•Ease of entry and relaxed provisions for MFs intending to launch only passive schemes under MF Lite registration. (Section I)
•Ease of compliance, relaxed disclosures and other regulatory requirements for passive schemes under existing MFs as well as schemes that may be launched under the MF Lite registration. (Section II)
The comments and suggestions should be submitted by latest by July 22, 2024, by this link.
