A new code of conduct has been introduced for mutual fund managers and dealers which can make them more accountable.
To form them, self-clearing members, to settle and clear their trades within the debt segment on behalf of its fund schemes. In a report on October 29, it had been said that the chief officer of the businesses is chargeable for ensuring that every one of its managers and dealers follows the code of conduct.
It also stated that any violation of the code of conduct is taken care of and addressed.
Currently, investment firm norms require AMCs and trustees to follow a code of conduct. Also, the CEO is entrusted with several responsibilities.
The fund managers and dealers will abide by the code of conduct and submit a quarterly self-certification to the trustees that they need complying with the code of conduct or list exceptions if any.
Fund managers will have an appropriate and adequate basis for investment decisions and can be accountable for investment within the funds managed by them.
Further, fund managers will record in writing, the choice of shopping for or selling securities along with the detailed justifications for such decisions and not savors any act which ends up in artificial window dressing of the online asset value (NAV).
It is the dealers’ job to require care of the orders and confirm they're executed on the best available terms, taking into account the relevant market at the time for transactions of the sort and size concerned to attain the objectives of the scheme and within the best interest of all the unitholders.
Fund managers and dealers will make sure that investments are made within the interest of the unitholders, and can act fairly and cater to market participants consistently and transparently.
Also, they'll identify existing or potential conflicts of interest as per their institution's policies and address the identical and disclose all interests in securities PRN by statutory requirements.
Further, they're not allowed to hold out any transaction on behalf of a fund with any counterparty who is an associate of the sponsor/AMC/fund manager/dealer/CEO "unless such transaction is distributed on length basis on terms and at a price in keeping with best execution standards and at a commission rate no beyond customary institutional rates."
They are not alleged to "indulge in any unethical business activities or professional misconduct involving dishonesty, fraud or deceit or commit any act that might damage the reputation of the organization or the investment trust industry".
They cannot offer or accept any inducement about the affairs of managing the funds of unitholders which is probably going to conflict with the duties owed to the unitholders and not receive any gift or entertainment which isn't in adherence of the policy of the AMC framed during this regard.
Concerning communication and disclosure, they said fund managers and dealers will always communicate in an unambiguous, transparent, and accurate manner and conduct all communication during market hours through recorded modes and channels only.
They will provide appropriate inputs to the valuation agencies and highlight any material deviation.
Further, they're going to not disclose any material non-public information that might affect the worth of investment to external parties and cannot act or cause others to act on such information.
Also, they'll highlight and produce to the notice any instance of suspected malpractice or market misconduct to the acceptable risk, compliance, and regulatory chains of command.
They said they can't favor one scheme over another for the aim of security allocation, transfer of advantages, or any valuation gain or loss including by way of inter scheme transfers or otherwise among others.