Chief Executive Officers (CEOs), Managing Directors (MD) or any equivalent officials of asset management companies (AMC) will be held ‘responsible and accountable’ for implementing mechanisms to deter potential market abuse, SEBI said in a circular on August 5.

The Securities and Exchange Board of India (SEBI) released the circular outlining the amendments made to the SEBI  (Mutual  Funds) Regulations, 1996, directing AMCs to set up institutional mechanisms to deter market abuse, including front-running and fraudulent securities transactions. Further, AMCs must set up a whistle blower policy for employees to report any case of violations, the market regulator added.

SEBI placed the responsibility and accountability of implementing the mechanisms on the CEOs, MDs or any other officer in-charge of compliance at the AMC. The amendment was made public through a gazette notification on August 1, 2024.

The SEBI regulation assumes importance as it comes weeks after the markets watchdog reportedly investigated a mutual fund house for alleged frontrunning.