Close-ended funds such as FMPs to be listed on exchanges today

December 12, 2008 by  

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Close-Ended Funds SEBI order: Fixed Maturity Plans ( FMPs ) and other close-ended funds have to be listed in BSE/NSE

SEBI controls on fmpsMutual Fund managers have to ensure that all close-ended fund schemes such as Fixed Maturity Plan schemes ( FMPs ) have to get their schemes listed on NSE/BSE today

Per SEBI, the only close-ended fund schemes that are excluded from this SEBI dictat are equity linked saving schemes

SEBI is taking the right steps to ensure liquidity problems looming in Mutual Funds due to withdrawls from FMPs (fixed maturity plans) is tackled soon

Liquidity problems in MFs is leading SEBI to take strong decisions regarding close-ended funds such as fixed maturity plans. Transparency and tradeability have been the key problems with close-ended funds such as FMPs- Sebi is doing the right thing by addressing both these issues.

However, some investors will probably suggest that SEBI is acting rather late and putting these measures earlier could have prevented the panic withdrawls from close-ended funds such as FMPs and the corresponding liquidity scare in the entire Indian mutual fund industry

Compulsory listing of close-ended funds such as FMPs in exchanges and stopping early withdrawls from fixed maturity plans is a good idea

SEBI has also ensured that early withdrawls from close-ended funds such as FMPs is a thing of the past (with or without minor exit load penalties). This will further ease the liquidity scare in the mutual fund industry

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