SEBI Proposes 'MF Lite' for Easy Compliance in Passive Mutual Funds

India’s financial watchdog, SEBI, has proposed a relaxed regulatory framework termed 'MF Lite' to ease compliance for passively managed mutual funds. This move aims to foster innovation, encourage competition, and streamline entry for such schemes, differentiating from the more stringent requirements for active fund management.

In a significant move towards regulatory easing, the Securities and Exchange Board of India (SEBI) has proposed a new framework, 'MF Lite', aimed at simplifying compliance for passively managed mutual fund schemes such as ETFs and index funds. This development was detailed in a consultation paper released on Monday.

The impetus behind 'MF Lite' stems from the inherent lower risks associated with passive fund management compared to active fund schemes, which necessitate expert fund managers and rigorous oversight. SEBI's proposal seeks to not only reduce compliance burdens but also promote innovation, enabling a more competitive landscape for mutual funds dedicated to passive schemes.

This relaxed regulatory framework would apply to mutual funds wishing to operate solely passive schemes under a new category of registration while also offering eased provisions for existing funds managing both active and passive schemes. Public comments on the proposal are invited until July 22, with the final framework expected to bolster easier market entry and operational flexibility for passive mutual funds.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)