Stock market investors richer by over Rs 9.76 lakh crore in five days The five-day rally in the equity market has made investors richer by over Rs 9.76 lakh crore as the benchmark BSE Sensex jumped 2,265.8 points during this period. Driven by the continued optimism in equities, the market capitalisation of BSE-listed firms jumped Rs 9,76,749.78 crore to Rs 2,60,42,730.43 crore in five days.On Thursday, the Sensex climbed 284.42 points or 0.51 per cent to settle at 55,681.95 points.In five days, the 30-share BSE benchmark has rallied 2,265.8 points or 4.24 per cent. International oil benchmark Brent crude fell 3.58 per cent to USD 103.2 per barrel. Foreign institutional investors were net buyers on Wednesday, picking up shares worth Rs 1,780.94 crore, as per exchange data.“Investors traded with cautious optimism as gains in oil & gas, power, realty & banking stocks helped markets extend gain for the 5th straight session. “The return of FIIs into domestic equity markets in the last few sessions coupled with receding commodity prices and hopes that US Fed may not go for aggressive rate hikes in its next meeting has somewhat tempered the fears of investors,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities Ltd, said.Among the Sensex constituents, IndusInd Bank, Bajaj Finance, Bajaj Finserv, Asian Paints, Tech Mahindra, Axis Bank, Larsen & Toubro and Power Grid were the major gainers on Thursday. Shares of IndusInd Bank climbed 7.88 per cent after the company reported a 60.5 per cent jump in net profit for the quarter ended June.Dr Reddy’s Lab, Kotak Mahindra Bank, Reliance Industries and HDFC Bank were the laggards.
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In its consultation paper, Sebi has suggested that trustees of mutual funds should focus on market abuse by AMC, its employees and mis-selling by the AMC to increase the asset base.
Also, trustees should be responsible for fairness of fees and expenses charged by the AMC, compare its performance with peers and ensure that AMC’s sponsor is not getting any undue advantage.
In addition to the core areas, the trustees should be responsible for periodically reviewing the steps taken by AMCs for the folios which do not contain all KYC attributes with bank details.
Further, Sebi has suggested that trustees and their resource persons should independently evaluate the extent of compliance by AMC and not merely rely on AMC’s assurances.
To facilitate trustees’ supervision, AMCs should provide them with analytical information.
Presently, the trustees primarily rely on the AMCs for ensuring compliance with the applicable rules.
Under the rules, trustees hold the property of the mutual fund in trust for the benefit of the unitholders. The trustees appoint an AMC to float schemes for the mutual fund and manage the funds mobilised under various schemes, in accordance with the investment objectives.
“In view of the increasing scale and reach of the mutual fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance,” Sebi said on Friday.
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Over the past decade there has been a five-fold increase in the size of the mutual fund industry. The assets under management (AUM) has surged from Rs 7.93 lakh crore in November 2012 to Rs 39.89 lakh crore in December 2022.
To ensure that trustees devote time and attention to their core responsibilities, Sebi has suggested that for fulfilling other responsibilities, trustees may rely on professional firms such as audit firms, legal firms, merchant bankers for carrying out due diligence on their behalf.
The Sebi also listed some duties trustees can delegate to AMCs. This include ensuring that all systems are in place prior to the launch of any scheme by the AMC, and calculating any income in the mutual fund due to the fund and any income received in the mutual fund for unitholders.
The regulator has proposed to provide a one year time to existing trustees with board of trustee structure to convert into a trustee company, from governance point of view.
Presently, two structures for trustees are permitted — corporate and board of trustees structure. Moreover, there are a few mutual funds which have the board of trustees structure while the trustees of all other mutual funds have adopted the structure of a trustee company.
Considering the enhanced role of trustees over the period of time, Sebi has suggested to increase the minimum number of trustees to adequately perform their functions. Presently, the minimum number of trustees prescribed is four.
Also, it has been proposed that the chairperson of the trustee company should be an independent director.
Sebi has suggested that apart from the meeting of the audit committee of AMCs and trustees (which mostly comprises of independent directors), the board of AMCs and the board of trustees may be mandated to meet at least once a year to discuss the issues concerning the mutual funds.
The regulator proposed that the existing MF Regulations on AMC and its obligations may be amended to include additional clauses with respect to the obligations of the board of AMC.
The proposed amendment may include a clause which casts an obligation on the board of AMC to ensure that all the activities of the asset management company are in accordance with the provisions of these regulations.
The Securities and Exchange Board of India (Sebi) has sought comments from public till February 24 on these proposals.