Limited Purpose Clearing Corp: MFs asked to use FY21 debt asset base

Our Bureau Mumbai | Updated on April 07, 2021

It will be based of debt fund AUM as of March-end

Capital market regulator SEBI has modified the contribution norm of asset management companies (AMCs) for setting up of Limited Purpose Clearing Corporation. The contribution of AMCs will now be based on their debt fund AUM as of FY2021 instead of 2019-20.

SEBI had set up a working group consisting of representatives from various mutual funds, Clearing Corporation of India and AMFI for developing a corporate bond market for mutual funds.

In February, SEBI had prescribed that the contribution from AMCs for the share capital of LPCC shall be in proportion to the average AUM of open-ended, debt-oriented MF schemes (excluding overnight, gilt fund and gilt fund with 10-year constant duration, but including conservative hybrid schemes) managed by them for financial year (FY) 2019-20.

Subsequent to a representation made by AMFI, SEBI has said that contribution of AMCs shall be based on average AUM of debt-oriented schemes for financial year 2020-21, it said on Tuesday. SEBI had prescribed a share capital of ₹150 crore for setting up LPCC with contribution of AMCs.

The SEBI board meeting in September had approved the proposal to set up an LPCC for clearing and settling of repo transactions in corporate debt securities on advice of the working group constituted under the Mutual Fund Advisory Committee. AMFI will calculate contribution per AMC based on the average AUM and inform all AMCs.

Published on April 06, 2021

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