Sebi's inspection report also alleged non-furnishing of the physical copies of the reports containing prescribed details to clients on a half yearly basis.
The regulator said the gross open position across all contracts should not exceed 15% of the total open interest or USD 100 million,whichever is higher.
The panel will give its recommendation that would help the government to finalise the successor to UK Sinha ýwhose term ends on February 17.
Over 60 representatives from investment banks, broking firms, registrars and syndicate banks met market regulator Sebi on January 11 expressing their concerns on implementing the new diktat.
To safeguard investors' interest, Sebi tightened its norms for MFs' exposure to riskier corporate bonds including by capping the investment limit in bonds of a single company at 10%.
Securities and Exchange Board of India (Sebi) is set to come out with sweeping changes in the way mutual funds invest in bonds following the recent crisis at JP Morgan.
Government plans to allow single foreign investor to hold 15% in Indian stock exchanges and depositories
The proposal comes in the wake of requests from foreign investors to allow them have a larger pie of the country’s marquee public utilities.
"The large order by the institution came well in time around 2 pm but the custodian took longer time to process it," said a person familiar with the development.
With officials being quizzed, markets regulator seeks to know if investigating agency is authorised to question quasi-judicial functions.
Last week Sebi announced it will distribute Rs 18 crore to 4.63 lakh investors who missed allotments in the 21 IPOs launched during 2003-05.
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