SEBI Released Norms for Money Market and Debt Securities

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Sebi came out with norms for valuation of money market and debt securities that are rated below investment grade, a move aimed at ensuring uniformity and consistency in valuation across the mutual fund industry. In a circular, the regulator said all money market and debt securities which are rated below investment grade shall be valued at the price provided by valuation agencies.

Till the agencies compute the valuations, such securities would be valued on the basis of indicative haircuts provided by the agencies. “AMCs (asset management companies) may deviate from the indicative haircuts and/ or the valuation price for money market and debt securities rated below investment grade provided by the valuation agencies” subject to certain conditions, the circular said.

The detailed rationale for deviation from the price post haircuts or the price provided by the valuation agencies should be recorded by the AMC. Further, AMCs should immediately disclose instances of deviations under a separate head on their websites. The circular has been issued in order to have “uniformity and consistency across the mutual fund industry on valuation of money market and debt securities rated below investment grade”.

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