Economics · Economy
An Asset Management Company experiences severe, unexpected redemption pressures amounting to 5% of its total equity AUM during a sharp single-day market drop. Which of the following potential courses of action is legally valid under the prescribed SEBI liquidity risk management framework?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The fund manager is required to immediately liquidate all mid-cap holdings to preserve a static large-cap classification mandate.
- 2The Trustees can restrict redemptions for a maximum period not exceeding 10 working days in any 90-day window, subject to prior approval from both the AMC Board and SEBI.✓
- 3The AMC can instantly levy an unscheduled, temporary 5% emergency exit load across all redemption tiers to protect assets.
- 4The Trustees can independently and immediately suspend all redemptions for up to 30 calendar days without external notifications.
Correct answer
The Trustees can restrict redemptions for a maximum period not exceeding 10 working days in any 90-day window, subject to prior approval from both the AMC Board and SEBI.
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