SEBI allows MFs to sell government securities

April 16th, 2008 - 10:54 pm ICT by admin  


Mumbai, April 16 (IANS) In an effort to further develop the debt market, market regulator Securities Exchange Board of India (SEBI) has decided to allow mutual funds (MFs) to sell government securities contracted for purchase in delivery versus payment (DVP III) mode. Under the DVP III mode of settlement, MFs can sell government securities, already contracted for purchase without taking delivery, provided the approved central counter party, Clearing Corporation of India Ltd (CCIL), guarantees the transaction.

At present, the MFs cannot sell such securities contracted for purchase, as they are required under SEBI Regulations to take the actual physical delivery of securities. The decision was taken at a SEBI board meeting Wednesday.

The MFs have been made on par with other market participants like banks, primary dealers and insurance companies as they can now go in for the net settlement of government securities transactions.

At the meeting, the SEBI board also approved the participation of mutual funds in ‘when-issued’ (WI) markets.

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