MUMBAI: The Securities and Exchange Board of India has proposed changing the cut-off time for determining the net asset value for redemption of units in overnight mutual fund schemes from 3 pm to 7 pm. “This change will increase the time for stockbrokers and clearing members to unpledge units of MFOS (Mutual Fund Overnight Scheme) and make redemption claims to mutual funds at the end of market hours,” Sebi said in a discussion paper. It is proposed to be given later.” on monday. The regulator said overnight schemes receive funds invested in securities with a one-day maturity on the next business day.
To meet redemption requests, overnight schemes do not require sale transactions to take place before market hours. Alternatively, these schemes may decide not to reinvest the maturity proceeds received on the T+1 settlement date based on redemption requests.
Since money has to be invested every day, the amount of a redemption request received on day T will not be reinvested on day T+1, but will instead be used for payment. Therefore, the redemption schedule, whether at 3 p.m. or 7 p.m., will not affect the fund’s valuation or ability to redeem investments, the company said.
