By IANS
Mumbai : Market regulator Securities and Exchange Board of India (SEBI) has allowed mutual fund players to short sell.
Short selling is a way to profit from the decline in price of a stock. To profit from the stock price going down, short sellers can borrow a stock and sell it, expecting that it will decrease in value so that they can buy it back at a lower price and keep the difference.
SEBI also reduced the expenses charged to investors by Index Fund Schemes (IFSs). IFSs are those mutual fund schemes that invest in securities in the same proportion as an index of stocks such as Nifty.
Mutual fund players are allowed to short sell, provided that in case of an IFS, the investment and advisory fees to investors shall not exceed O.75 percent of the weekly average of net assets.
Additionally, the total expenses of the scheme including investment and advisory fees should not exceed 1.5 percent of the weekly average of net assets.
However, these amendments would take effect on a later date to be notified by SEBI.
It will be after the new framework for short selling of securities and securities’ lending and borrowing is put into place.