SEBI has introduced new valuation metrics for mutual funds, requiring securities used in repo transactions to be valued on a mark to-market (MTM) basis.What's Happening?SEBI has decided to introduce mark-to market valuation for mutual fund repo transactions to ensure more accurate pricing. This rule will come into effect on January l, 2025. Under the MTM method, assets are valued based on their current market price, ensuring transparency and fairness. SEBI's move aims to protect investors' interests and enhance clarity in mutual fund operations.What is Mark-to-Mkt Valuation?MT Mvaluation is a process where financial assets or securities are assessed based on their current market price. This approach is widely used in mutual funds, derivatives, and other financial transactions to provide transparency and accuracy to investors. Repo transactions, also known as repo or sale repurchase agreements, involve selling securities with an agreement to repurchase them later. This tool is commonly used to raise short-term capital.Impact of the New RuleAll types of repo transactions will now be valued using the MTM method, with an exception for overnight repo transactions. Additionally, SEBI has stated that all money market and debt securities, including floating-rate securities, will be valued based on the average security-level price provided by valuation agencies. If valuation agencies do not provide security-level prices for new security not held by any mutual fund, it can be valued based on the purchase yield or price at the time of allotment or purchase.What Does This Mean for !nvesto!'s?SEBIis's decision will enhance the transparency and reliability of mutual funds. The mark-to-market method will help investors better assess the risks and performance of MFs. It will also streamline MF operations, making them safer for investors.What's Next?SEBI's move to introduce mark-to-market (MT M) valuation for repo transactions is a significant step toward safeguarding investors and promoting discipline in mutual funds. This change will not only boost the transparency of financial products but also strengthen investor confidence. It will make risk management and decision-making easier for investors, ultimately fostering a more robust investment ecosystem.

SEBI's New Mutual Fund Rules: Know Impact on Your Investments

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