Facts for Prelims (FFP)
Source: TH
Context: SEBI has mandated Asset Management Companies (AMCs) to establish an institutional mechanism to deter potential market abuse, including front-running, following recent instances observed by the market regulator.
What is Front Running?
What are AMCs?
Asset Management Companies (AMCs) are financial institutions responsible for managing and investing funds pooled from investors in various financial assets such as stocks, bonds, and other securities. These companies create and manage investment products like mutual funds, exchange-traded funds (ETFs), and pension funds.
Other Changes approved:
- Amendments to SEBI (Mutual Funds) Regulations, 1996 were approved by the SEBI Board, requiring AMCs to implement enhanced surveillance systems and internal controls to identify and prevent misconduct.
- AMCs must also have a whistleblower mechanism for transparency. SEBI will outline the framework, while the Association of Mutual Funds in India (AMFI) will specify detailed standards.
