Markets regulator Sebi on Monday released revised risk management framework for mutual funds with certain mandatory and recommendatory elements.
Asset management companies (AMCs) need to perform a self-assessment of their risk management framework and practices and submit a report to Sebi along with the roadmap for implementation of the framework, read a Sebi circular.
This exercise must be completed and the necessary systems must be in place at the AMCs to enable compliance with the circular with effect from January 1, 2022. AMCs may also choose to do so even before that.
The recommendations of mutual funds advisory committee have been suitably incorporated in the revised risk management framework (RMF), it added. The review was necessitated against the backdrop of significant developments in the mutual fund industry and in the financial markets as a whole, including in the area of product innovation, investment in newer asset classes, distribution landscape, technological evolution, investor penetration and awareness, increase in risk elements, among others.
Compliance with the framework should be reviewed annually by the AMC and review reports has to be placed before the board of AMC and trustees for their consideration and appropriate directions, if any. Sebi has come out with roles and responsibilities of board of AMC and trustees, chief executive officer (CEO), chief risk officer (CRO), chief investment officer (CIO), role of other CXOs and fund manager.
