InvestorQ : Can you tell me about this Swing Pricing that SEBI has permitted in debt funds?
Arti Chavan made post

Can you tell me about this Swing Pricing that SEBI has permitted in debt funds?

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Rutuja Nigam answered.
3 months ago
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It is still some time away and SEBI has just announced the introduction of swing pricing mechanism for open-ended debt funds. Now AMFI needs to come up with a complete framework for swing pricing. This was disclosed by SEBI in its previous board meeting and now it has decided to take it forward. Swing pricing will discourage large investors from sudden redemptions as the price would get adjusted against them on volatile days.

The Swing Pricing framework will only be applicable when there are net outflows or when there is a kind of panic in the market. Swing pricing will ensure fairness for entering, exiting and existing investors in a debt fund. The swing pricing will adjust the NAV such that HNIs are not able to leverage very low prices in times of volatility. Thus, they cannot squeeze profits out of general investors. It will stop small investors subsidizing HNIs.
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