Markets regulator Sebi on Tuesday decided to introduce new valuation metrics for repurchase or repo transactions by mutual funds, whereby securities used in such transactions will be valued on a mark-to-market basis.
The new valuation metrics are aimed at having uniformity in valuation methodology of all money market and debt instruments as well as at addressing the concerns of unintended regulatory arbitrage that may arise due to different valuation methodology adopted.
The new framework will come into effect from January 1, 2025, the Securities and Exchange Board of India (Sebi) said in its circular.
In its circular, Sebi said it has decided that the “valuation of repurchase (repo) transactions including TREPS with tenor of up to 30 days shall also be valued at mark to market basis”.
At present, repo transactions including tri-party repo (TREPS) with tenor of up to 30 days are valued on cost-plus accrual basis.
Further, the valuation of all repo transactions, except for overnigh
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