SEBI on May23, 2022 has issued a Circular on Development of Passive Funds. AMC shall appoint at least two Market Makers(MMs), who are members of the Stock Exchanges, for Exchange Trading Funds to provide continuous liquidity on the stock exchange platform. MM shall transact with AMC only in multiples of creation unit.
The AMC shall have an approved policy regarding market making in ETFs based on the framework for market making. AMCs shall facilitate in-kind creation and redemption of units of ETFs (including Debt ETFs) by MMs on a best effort basis.