Debt ETFs/index funds to have minimum of 8 issuers: Sebi

Mumbai: The Securities and Exchange Board of India (Sebi) on Friday said that debt exchange traded funds (ETFS) and index funds must have a minimum of eight issuers, and no single issuer will have more than 15 per cent weight in the index.

In a circular, the markets regulator said the debt ETFs/index funds will replicate the index completely, and if this is not feasible due to non-availability of issuances of the issuer forming part of the index, the debt ETFs/index funds will be allowed to invest in other issuances issued by the same issuer having deviation of +/- 10 per cent from the weighted average duration of issuances forming part of the index, subject to single issuer limit.

However, at an aggregate portfolio level, the duration of debt ETF/index fund shall not deviate +/- 5 per cent from the duration of the index, the regulator said.

In an event where the credit rating of an issuance falls below the investment grade or rating mandated in the index methodology, rebalancing by debt ETFs/index funds will be done within a period of 5 working days.

The norms will not be applicable to debt ETFs/index funds tracking debt indices having constituents as government securities (G-Secs), Treasury Bills and Tri-party Repo (TREPS) only.


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