SEBI modifies norms on holding physical goods by mutual fund schemes

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The Securities and Exchange Board of India vide its Notification dated 5th June 2020 has relaxed the timelines for disposal of physical goods held by mutual fund schemes for settlement purposes for investments made through exchange-traded commodity derivatives. 

Mutual funds cannot invest in physical goods except gold through gold exchange-traded funds (ETFs). However  Exchange-traded commodity derivatives (ETCDs) having gold as the underlying asset would be considered as ‘gold-related instrument’ for gold ETFs.

As per the new modification physical gold and silver, will have to be disposed of not exceeding 180 days from the date of holding of such physical goods.

For other goods, funds need to dispose of them by the immediate next expiry day of the same contract series of the commodity.

However, if the final expiry date of the goods falls before the immediate next expiry day of the same contract series of the said commodity, then within 30 days from the date of holding of physical goods.

Click here to read the Notification.

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