Introduction of Swing Pricing Framework for Open-Ended Debt Mutual Fund Schemes

In the case of mutual funds, the mechanism of swing pricing is intended to protect existing investors of a fund from the costs incurred when other investors buy or sell units in that fund. In cases of severe liquidity stress at the AMC level or severe dysfunction at the market level, the Swing Pricing Guidelines gets triggered, which offer a contingency plan in case everything else fails. SEBI, on September 29, 2021 issued the swing pricing framework for open-ended debt mutual fund schemes, except overnight funds, gilt funds, and gilt with 10-year maturity funds. However, based on the request received from AMFI, the date for implementation of the provisions of the aforesaid circular was postponed to May 1, 2022.