SEC hopes to see mutual funds' idle money in stock market
The securities regulator Wednesday assured the asset management companies of considering their proposal for freehand investment in the stock market for the time being to increase liquidity flow, officials said.
The assurance came at a scheduled meeting held between the Securities and Exchange Commission (SEC) and the representatives of asset management companies to find out supportive measures for restoring the market's stability.
SEC Executive Director Mohammad Saifur Rahamn said at the meeting that the asset managers sought postponement of Section 56 of the Mutual Fund Act 2001 for some time, so that they can freely support the market, injecting idle funds.
"The SEC has expressed its optimism for considering their proposal for the sake of the market," Mr. Rahman told reporters at a press briefing where the leaders of asset management companies were present.
As per the Section 56 of the Mutual Fund Act 2001, a fund manager is permitted to invest 75 per cent of a scheme in the stock market.
They can invest maximum 10 per cent and 25 per cent of a scheme in the shares of a company and a sector respectively.
Earlier, the SEC relaxed the investment bindings for mutual funds from January to March, 2011.
"The regulator expects this time also some idle money of mutual funds to be injected in the stock market due to relaxation of investment bindings," Mr. Rahman added.
He said the regulator is trying its best to revive the stability of the stock market.
"An outcome of the continuous efforts of SEC was Wednesday's meeting. We all are optimistic about the restoration of stability to the stock market," Mr Rahman said.
AIMS Managing Director and CEO Yawar Sayeed said the dividends of mutual funds are likely to be below expectation in the next fiscal as the government recently imposed taxes on mutual funds.
"The mutual funds never faced tax measures as these are not companies and run by trustees. The SEC should make the government realise it to re-consider the issue so that better dividends can be offered to unit holders," Mr. Sayeed said.
The securities regulator Wednesday assured the asset management companies of considering their proposal for freehand investment in the stock market for the time being to increase liquidity flow, officials said.
The assurance came at a scheduled meeting held between the Securities and Exchange Commission (SEC) and the representatives of asset management companies to find out supportive measures for restoring the market's stability.
SEC Executive Director Mohammad Saifur Rahamn said at the meeting that the asset managers sought postponement of Section 56 of the Mutual Fund Act 2001 for some time, so that they can freely support the market, injecting idle funds.
"The SEC has expressed its optimism for considering their proposal for the sake of the market," Mr. Rahman told reporters at a press briefing where the leaders of asset management companies were present.
As per the Section 56 of the Mutual Fund Act 2001, a fund manager is permitted to invest 75 per cent of a scheme in the stock market.
They can invest maximum 10 per cent and 25 per cent of a scheme in the shares of a company and a sector respectively.
Earlier, the SEC relaxed the investment bindings for mutual funds from January to March, 2011.
"The regulator expects this time also some idle money of mutual funds to be injected in the stock market due to relaxation of investment bindings," Mr. Rahman added.
He said the regulator is trying its best to revive the stability of the stock market.
"An outcome of the continuous efforts of SEC was Wednesday's meeting. We all are optimistic about the restoration of stability to the stock market," Mr Rahman said.
AIMS Managing Director and CEO Yawar Sayeed said the dividends of mutual funds are likely to be below expectation in the next fiscal as the government recently imposed taxes on mutual funds.
"The mutual funds never faced tax measures as these are not companies and run by trustees. The SEC should make the government realise it to re-consider the issue so that better dividends can be offered to unit holders," Mr. Sayeed said.