17 Apr 2008 | 11:26
Sebi approves funds to sale G-Secs under DVP-III
For the development of the domestic debt market, the Securities and Exchange Board of India (Sebi) has brought mutual funds on a par with primary debt dealers, banks and insurance companies.
Sebi decided to allow mutual funds to sell government securities (G-sec) contracted for purchase in the DVP-III mode. Under the DVP-III mode of settlement, it is possible to sell government securities already contracted for purchase without taking delivery, provided the transaction is guaranteed by the Clearing Corporation of India.
Up till now, MFs could sell government securities only if they actually hold the securities in their portfolio. By allowing MFs to sale G-Secs on the day of purchase, it is likely to improve liquidity in the government securities market, reduce the price risk on the part of market participants.
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