Sebi to prescribe stress tests, liquid holdings for debt mutual funds

This is aimed at improving liquidity in all schemes and would help schemes to meet sudden redemption pressures, said chairman Ajay Tyagi

The Securities and Exchange Board of India (Sebi) on Tuesday said it would tweak norms for debt MFs to improve liquidity and help schemes meet redemption requests at a short notice.
 
The guidelines could mandate all debt schemes to hold a certain percentage of their portfolios in liquid assets and conduct regular stress tests to assess their liquidity profile. An additional transaction cost could be levied for redemption in schemes that have illiquid papers.
 
Addressing the industry at Association of Mutual Funds in India’s (Amfi’s) 25th AGM, Sebi Chairman Ajay Tyagi said the regulator was facilitating the establishment