Sebi could make 'pre-trade' allocation mandatory in Indian markets

Pooled investors such as MFs or FPIs will have to state schemes under which they are acquiring shares

The Securities and Exchange Board of India (Sebi) will soon issue a set of rules for trade allocations of institutional investors such as mutual funds (MFs) or foreign portfolio investors (FPIs).

Sources say Sebi could make ‘pre-trade’ allocation mandatory. Currently, pooled investors, including MFs and FPIs, are allowed to buy blocks of shares from the market without assigning these to a specific scheme. Under the new framework, funds will have to determine beforehand how much of the purchased shares would go into each scheme.

The move comes after several MFs were reportedly allotting shares to their schemes on an arbitrary