The Securities and Exchange Board of India (SEBI) on October 24, 2024, issued a Draft circular for public comments on Valuation of repurchase (repo) transactions with tenor of upto 30 days.
The valuation of all investments by Mutual Funds in money market and debt securities, except certain securities which include repurchase transactions with tenor of upto 30 days, is to be carried out on a mark-to-market basis. As regards the repurchase (repo) transactions (including tri-party repo i.e, TREPS) with tenor of upto 30 days, the same are permitted to be valued on a cost plus accrual basis i.e., amortisation based valuation.
Based on the consultation with industry participants as well as the recommendation of the Mutual Fund Advisory Committee (MFAC), it is proposed that the valuation of investments by Mutual Funds in repo transactions of tenor upto 30 days may also be mandated to be carried out on a mark to market basis. The same shall be in line with the valuation norms for investments by Mutual Funds in other money market and debt instruments.
The public comments are invited on the draft Circular on “Valuation of repurchase (repo) transactions by Mutual Funds”, placed at Annexure A. The comments/suggestions should be submitted latest by November 14, 2024, through the following link: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComm
