Sebi asks fund houses to contribute to clearing corporation as per FY21 AUM

The Securities and Exchange Board of India has revised the formula according to which fund houses are required to contribute to a Limited Purpose Clearing Corporation (LPCC) for clearing and settling repos in corporate debt securities. According to Sebi, the contributions (totalling ₹150 crore across the industry) must be made in proportion to the AUM of fund houses as in FY 2020-21. Previously, the formula referred to AUM in FY 2019-20.

Assets in overnight funds, gilt funds and gilt funds with constant 10 year duration have been excluded from the calculation but assets in conservative hybrid funds have been included. The contributions will not relax the net worth requirements that AMCs have to comply with. The LPCC is part of a broader set of measures taken by Sebi to improve liquidity in the corporate debt market. The measures have come in the wake of the crisis in 6 debt mutual funds of Franklin Templeton Asset Management in April 2020.