Sebi lays down operating norms for debt index funds and ETFs

Sebi has released new norms for passively-managed debt funds. Sebi has said that Debt ETFs/ Index Funds could be based on indices comprising of Corporate Debt Securities; or Government Securities, t-bills and/or State Development Loans (SDLs) (G-sec indices); or a combination of all.

“The new circular by SEBI on passive funds has some fantastic changes that will drive further transparency, liquidity and innovation. In particular the regulations on debt passives are a big positive for this fast growing category,” said Radhika Gupta, CEO, Edelweiss Mutual Fund.

According to the new norms, the constituents of the index in debt index funds should have adequate liquidity and diversification at issuer level. The constituents of the index shall be periodically reviewed also.