Sebi proposes swing pricing in open-ended debt schemes to protect investors

Swing pricing refers to the process of adjusting a fund's NAV to effectively pass on transaction costs stemming from either inflows or outflows from the schemes

The Securities and Exchange Board of India (Sebi) on Monday proposed to introduce a swing-pricing mechanism to protect mutual fund investors in an event of market dislocation.

Swing pricing refers to the process of adjusting a fund’s net asset value (NAV) to effectively pass on transaction costs stemming from either inflows or outflows from the schemes.

In a consultation paper, Sebi has said keeping in mind regulatory practices followed by other jurisdictions, a hybrid model is proposed which is partial swing during normal times and a mandatory full swing during times of market dislocation.

Sebi will determine ‘market dislocation’ either