In a bid to provide an exit route to mutual fund investors, the market regulator Securities and Exchange Board of India has directed the fund houses to list the units of schemes in the process of winding up on recognised stock exchanges.
The rule, which was brought about after the Franklin Templeton crisis, will have to be followed by all open and close-ended schemes.
"Accordingly, the units of Mutual Fund schemes which are in the process of winding up in terms of Regulation 39(2)(a) of MF Regulations, shall be listed on recognised stock exchange, subject to compliance with listing formalities as stipulated by the stock exchange," SEBI said in a circular on Wednesday.
However, selling the units of the scheme is optional, and not mandatory for the investors. "However, pursuant to the listing, trading on stock exchange mechanism will not be mandatory for investors, rather, if they so desire, may avail an optional channel to exit provided to them," it said.
The move came after Franklin Templeton wound up six of its high-risk high-return schemes leaving investors owning Rs 26,000 crore of the portfolio in the lurch. The move was triggered by Rs 5,000 crore worth of redemptions in 21 days -- which, if continued, would have hit the profitability of the fund house.
Meanwhile, Franklin Templeton has announced the appointment of an independent advisor -- Kotak Mahindra Bank -- to work together with Franklin Templeton Asset Management, to assist the Trustees in monetising portfolios of the six schemes that are being wound up.
Kotak Mahindra Bank, through its Debt Capital Markets team, will work closely with the Franklin Templeton Trustees, to assist with all portfolio actions in these six schemes that are being wound up. These actions will be limited to the below-mentioned schemes.
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