SEBI clarifies on Mutual Fund’s gross exposure

Markets regulator SEBI has clarified on cumulative gross exposure taken by mutual funds on exchange-traded commodity derivatives (ETCDs). In May 2019, the regulator had permitted mutual funds to participate in ETCDs.

In a circular yesterday, SEBI said that the short positions that are not exceeding the holding value of underlying goods received in physical settlement contracts would not be considered in the cumulative gross exposure taken by mutual funds on ETCDs.

It added that short positions not exceeding the long position on the same goods will also not be considered. It further said that mutual funds would not write options or purchase instruments with embedded written options in goods or on commodity future.