Date:20/03/2004 URL: http://www.thehindubusinessline.com/2004/03/20/stories/2004032002430500.htm

Back SEBI issues guidelines on cut-off timing for NAVs

Our Bureau

Mumbai, March 19

THE Securities and Exchange Board of India has issued the guidelines on uniform cut-off timing for net asset value of mutual funds (MFs).

The guidelines specify that for purchases of units in MFs, for valid applications received up to 3 p.m., the closing net asset value (NAV) of the day on which the application along with the cheque is received would be applicable. For those received after 3 p.m., the NAV of the next day would be applicable. In case of outstation cheques or demand drafts not payable at the place where the application is received, the closing NAV of the day on which the cheque or draft is credited would be applicable.

Similarly, for redemptions, applications received up to 3 p.m., would be valued on the same day's NAV and those received after 3 p.m. would be valued at the following day's NAV, states the guideline.

In the case of liquid funds, closing NAV of the day immediately prior to the day on which funds are available for utilisation by the fund shall be applicable for purchases. However, for applications received after 1 p.m., if the funds are available for utilisation by the fund on the same day, closing NAV of the same day shall be applied. For redemptions in liquid funds, applications received up to 10 a.m., by the mutual fund, the previous day's closing NAV would be applicable and for those received after 10 a.m., the same day's closing NAV would be taken into consideration.

These are applicable for "sweep" and "switch" transactions, clarified the guideline.

With respect to time stamping, the guideline clarified that each and every application for the purchase and the corresponding payment instrument shall be stamped on the face and back respectively, indicating the date & time of receipt and running serial number. The running serial number on the application and the corresponding payment instrument should be the same.

The latest date for implementing the guideline is March 25. The clause on time stamping is applicable in metros from May 15 and in other centres, the last date for implementation is June 15.

The compliance to this guideline is to be indicated to SEBI on the quarterly compliance reports as well as the half yearly trustee reports, stated the SEBI ruling.