IOSCO

About IOSCO

The International Organization of Securities Commissions (IOSCO) is the international body

that brings together the world's securities regulators and is recognized as the global
standard setter for the securities sector. IOSCO develops, implements and promotes
adherence to internationally recognized standards for securities regulation. It works
intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory
reform agenda.
Scope of Activities
IOSCO was established in 1983. Its membership regulates more than 95% of the world's
securities markets in more than 130 jurisdictions: securities regulators in emerging markets
account for 75% of its ordinary membership.
The IOSCO Objectives and Principles of Securities Regulation have been endorsed by both the
G20 and the FSB as the relevant standards in this area. They are the overarching core
principles that guide IOSCO in the development and implementation of internationally
recognized and consistent standards of regulation, oversight and enforcement. They form the
basis for the evaluation of the securities sector for the Financial Sector Assessment Programs
(FSAPs) of the International Monetary Fund (IMF) and the World Bank.
1) Capital Markets:
Siddhesh Raul (K233)

 Capital markets are where savings and investments are channeled between
suppliers—people or institutions with capital to lend or invest—and those in need.
Suppliers typically include banks and investors while those who seek capital are
businesses, governments, and individuals.
 Capital markets are composed of primary and secondary markets. The most common
capital markets are the stock market and the bond market.
 The best-known capital markets include the stock market and the bond markets.

A) Primary Market Vs Secondary Market:

Primary vs. Secondary Markets
Primary Market
When a company publicly sells new stocks or bonds for the first time—such as in an initial
public offering (IPO)—it does so in the primary capital market. This market is sometimes
called the new issues market. When investors purchase securities on the primary capital
market, the company that offers the securities hires an underwriting firm to review it and
create a prospectus outlining the price and other details of the securities to be issued.
All issues on the primary market are subject to strict regulation. Companies must file
statements with the Securities and Exchange Commission (SEC) and other securities
agencies and must wait until their filings are approved before they can go public. 1
Secondary Market
The secondary market, on the other hand, includes venues overseen by a regulatory body
like the SEC where these previously issued securities are traded between investors. Issuing
companies do not have a part in the secondary market. The New York Stock Exchange
(NYSE) and Nasdaq are examples of secondary markets.
The secondary market has two different categories: the auction and the dealer markets. The
auction market is home to the open outcry system where buyers and sellers congregate in
one location and announce the prices at which they are willing to buy and sell their
securities. The NYSE is one such example. In dealer markets, though, people trade through
electronic networks. Most small investors trade through dealer markets.

B) Regulation of capital market:

In India Regulation Of Capital Market is done by Securities& Exchange Board of India (SEBI).
Securities and Exchange Board of India (SEBI) has full autonomy and authority to regulate
and develop capital market. The government has framed rules under securities controls act,
the SEBI act and depositories act.
he primary functions of SEBI are as follows:
Protective Functions
I. It checks Price rigging
II. Prohibits insider trading
III. prohibits fraudulent and Unfair Trade Practices
Development Functions
I. SEBI promotes training of intermediaries of the securities market.
II. SEBI tries to promote activities of stock exchange by adopting a flexible and adaptable
approach
Regulatory Functions
I. SEBI has framed rules and regulations and a code of conduct to regulate the
intermediaries such as merchant bankers, brokers, underwriters, etc.
II. These intermediaries have been brought under the regulatory purview and private
placement has been made more restrictive.
III. SEBI registers and regulates the working of stock brokers, sub-brokers, share-transfer
agents, trustees, merchant bankers and all those who are associated with stock exchange in
any manner
IV. SEBI registers and regulates the working of mutual funds etc.
V. SEBI regulates takeover of the companies
VI. SEBI conducts inquiries and audit of stock exchanges.
The participation in the Indian Stock Market of both the domestic or foreign financial
intermediaries are governed by the regulations framed by SEBI. Additionally, Foreign
Portfolio Investors (FPIs) can participate in Indian Stock Market after registering them with
an authorized Depository Participant.

2) Stock Exchanges :
Jatin Kothari ( K247)
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and
traders can buy and sell securities, such as shares of stock, bonds, and other financial
instruments. Stock exchanges may also provide facilities for the issue and redemption of
such securities and instruments and capital events including the payment of income and
dividends.[citation needed] Securities traded on a stock exchange include stock issued by
listed companies, unit trusts, derivatives, pooled investment products and bonds. Stock
exchanges often function as "continuous auction" markets with buyers and sellers
consummating transactions via open outcry at a central location such as the floor of the
exchange or by using an electronic trading platform.
To be able to trade a security on a certain stock exchange, the security must be listed there.
Usually, there is a central location at least for record keeping, but trade is increasingly less
linked to a physical place, as modern markets use electronic communication networks,
which give them advantages of increased speed and reduced cost of transactions. Trade on
an exchange is restricted to brokers who are members of the exchange. In recent years,
various other trading venues, such as electronic communication networks, alternative
trading systems and "dark pools" have taken much of the trading activity away from
traditional stock exchanges.
Initial public offerings of stocks and bonds to investors is done in the primary market and
subsequent trading is done in the secondary market. A stock exchange is often the most
important component of a stock market. Supply and demand in stock markets are driven by
various factors that, as in all free markets, affect the price of stocks (see stock valuation).

There is usually no obligation for stock to be issued through the stock exchange itself, nor
must stock be subsequently traded on an exchange. Such trading may be off exchange or
over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly,
stock exchanges are part of a global securities market. Stock exchanges also serve an
economic function in providing liquidity to shareholders in providing an efficient means of
disposing of shares.
Indian Capital Markets are regulated and monitored by the Ministry of Finance, The Securities
and Exchange Board of India and The Reserve Bank of India.
The Ministry of Finance regulates through the Department of Economic Affairs - Capital
Markets Division. The division is responsible for formulating the policies related to the orderly
growth and development of the securities markets (i.e. share, debt and derivatives) as well as
protecting the interest of the investors. In particular, it is responsible for
 institutional reforms in the securities markets,
 building regulatory and market institutions,
 strengthening investor protection mechanism, and
 providing efficient legislative framework for securities markets.

The Division administers legislations and rules made under the

 Depositories Act, 1996,
 Securities Contracts (Regulation) Act, 1956 and
 Securities and Exchange Board of India Act, 1992.

3) SEBI Guidelines to invest in Mutual Funds

Yatharth Nandwana K232

a) SEBI keeps in place the regulatory framework and guidelines that govern and regulate

securities markets in the country. The guidelines for investors are listed below. Mutual

funds present the most diversified form of investment options and therefore, may carry a
certain amount of risk with it. Investors must be very clear in their assessment of their
 financial position and the risk-bearing capacity in the event of the poor performance of such
schemes. Investors must, therefore, consider the risk appetite of an investment scheme.

b) Before venturing into mutual fund investment, it is imperative for you as an investor to

obtain detailed information about the mutual fund scheme option. Having the right

information when required to make the necessary decision is the key to making suitable

investments. This may help in choosing the right schemes, knowing the guidelines to follow
and also be informed of the investors’ rights.

c) Diversify your portfolios

Diversification of portfolios allows investors to spread out their investments over various

schemes, thereby increasing chances of maximizing profits or mitigating risk of potentially

huge losses. Diversification is crucial to gaining a long-term and sustainable financial

advantage.

d) Avoid the clutter of portfolios

Choosing the right portfolio of funds requires managing and monitoring these schemes

individually with care. The investor must not clutter the portfolio and decide on the right

number of schemes to hold so as to avoid overlap and be able to manage each one of them

equally well. Not sure of the right schemes for your portfolio? ClearTax can help simplify this
for you. .

e) Assign a time dimension to the investment schemes

The investors should assign a time frame to each scheme to encourage the financial growth

of the plan. It may help in containing the volatility and fluctuations in the market if the plans
are maintained stably over a period.

4. Rules for Venture Capital Funds:

Aishwarya Singhle K240
1Introduction
Venture capital plays an important role in the life cycle of emerging industries by investing in
growth oriented high-risk ventures. It fills the void between the high quality ideas and the sources
of required funds. Where the traditional methods of funding, such as loan from banks, subsidies
from government bodies etc., comes as a costly and cumbersome affair for the new
entrepreneurs, venture capital funds have emerged as a saviour thereby providing necessary aid
to the cash starved innovative industries in exchange of securities.

In India, venture capital fund ("VCF") is regulated by Securities and Exchange Board of India
(Alternative Investment Funds) Regulations, 2012 ("AIF Regulations") issued by the Securities and
Exchange Board of India ("SEBI"). It is recognized as Category I Alternative Investment Fund which
acts as an intermediary in the financial market, to provide capital to small firms and budding start-
ups having high growth potential.

The investments done by a VCF primarily involve investments in unlisted securities of start-ups or
emerging or early stage Indian companies, limited liability partnerships involved in new products,
new services, technology or intellectual property right based activities or a new business model

Setting up of a VCFA company, Limited Liability Partnership, trust or any other body corporate
which satisfies the eligibility criteria as provided under the AIF Regulations can set up a VCF in
India by obtaining a certificate of registration from the SEBI.
The application for grant of registration certificate can be made by the eligible applicants on
submission of a form prescribed under first schedule of AIF Regulations along with the requisite
application fee with the SEBI. Basis the review of the application and the information submitted,
SEBI may issue registration certificate to VCF subject to certain conditions.

A VCF or any scheme launched by it should be close ended with a minimum tenure of 3 (three)
years and the tenure is to be determined at the time of filing application for registration with the
SEBI.

4.2Investment in VCF
 Investment in VCF is subject to certain conditions such as each scheme of VCF is required to have
a minimum corpus of INR 200 Million and every investor is required to invest atleast INR 10 Million
(except for the employees and directors of VCF who can invest a minimum of INR 2.5 Million).
Further, no scheme can have more than 1000 investor.

The VCF can raise funds from any investor whether Indian, foreign or non-resident Indians ("NRI")
by way of issue of units, however, any investment in VCF by a person resident outside India
(including a NRI) is governed by Foreign Exchange Management (Non-debt Instruments) Rules,
2019.

Investment conditions and restrictions by VCFThe investment strategy, investment purpose and
investment methodology of a VCF shall be mentioned in its information memorandum or
placement memorandum.Investments by VCF are subject to the certain conditions which, inter
alia, includes the following:-

i. Investment by VCF in securities of companies incorporated outside India are governed by

Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, as
amended from time to time;
ii. Investment in an investee company should not exceed 25 % of the corpus;
iii. Un-invested portion of the corpus can be invested in liquid mutual funds or bank deposits or
other liquid assets;
iv. Investment in associates can be done only if 75% of investors by value of their investment in the
VCF approve such investment;
v. Funds of a VCF can invest in units of another VCF;
vi. A VCF shall not borrow funds directly or indirectly or engage in any leverage except for meeting
temporary funding requirements for not more than thirty days, on not more than four occasions
in a year and not more than ten percent of the corpus;
vii. at least two-thirds of the corpus shall be invested in unlisted equity shares or equity linked
instruments of a venture capital undertaking or in companies listed or proposed to be listed on a
Small and Medium Enterprises ("SME") exchange or SME segment of an exchange;
viii. Not more than one-third of the corpus shall be invested in:
a. initial public offer of a venture capital undertaking whose shares are proposed to be listed;
b. debt or debt instrument of a venture capital undertaking in which the VCF has already made an
investment by way of equity or contribution towards partnership interest;
c. preferential allotment, including through qualified institutional placement, of equity shares or
equity linked instruments of a listed company subject to lock in period of one year;
d. the equity shares or equity linked instruments of a financially weak company or a sick industrial
company whose shares are listed;
e. special purpose vehicles which are created by the VCF for the purpose of facilitating or
promoting investment in accordance with the AIF Regulations.
4.3 Conclusion
The Indian economy despite having lot of potential for further growth becomes stagnant due to
lack of growing businesses. The venture capitalists have today emerged as the mainstream
source of finance for the innovative entrepreneurs thereby providing the requisite solution.

5) Rules for Private Equity Funds

Shashwat Shitut
K238

What are Private Equity Funds-

Private equity investment refers to the investments made by private equity firms, venture
capital (VC) firms or an angel investor. Each of these types of investors has a different goal
and employs different investment strategies but they all provide capital to a company to aid
its growth or satisfy working capital requirements.

Venture capital firms provide funds to nascent businesses that they deem to have high growth
potential. They invest in these early-stage companies (usually based on an innovative
technology) in exchange for an ownership stake. They take this risk hoping for the company
to be successful and earn a return through an eventual exit via an initial public offering (“IPO”)
or a trade sale (merger & acquisition). Due to the high level of risk involved in such
investments, venture capital investments are often prone to failures.

Investment in private equity is usually of the following types:

 Seed financing: where capital is provided to develop the business idea in exchange for
an equity stake.
 Start-up financing: where capital is provided to help the new business grow.
  First-stage: where capital is provided for the commercialization and production of
products. The funding at this stage is larger than the previous stages.
 Second-stage: where the second round of capital is infused for production, working
capital and other requirements of the business.
 Third-stage: where capital is provided for the expansion of the business.
 Bridge financing: where the capital is provided to carry out an IPO or an M&A. This is
often the final stage of investment for a VC firm.
 Leveraged Buyout (LBO)/ Buyout: where the capital and usually debt is used to acquire
the entire business or a controlling stake.
 Management Buyout (MBO): where capital is provided by the investment firm along
with the incumbent management to acquire a controlling stake in the business.

Rules For Private Equity Funds-

 Domestic Funds- Private Equity investment funds, Venture capital funds etc. fall under
the broadly defined term Alternate Investment Funds (“AIF”). As per the SEBI
(Alternative Investment Funds) Regulations, 2012 as amended on March 6, 2017.That
is- family trusts set up for the benefit of̳ relatives‘as defined under Companies Act,
1956, employee welfare trusts or gratuity trusts set up for the benefit of employees,
holding companies 'within the meaning of Section 4 of the Companies Act, 1956.
 Off-shore Funds- Offshore funds (i.e. investment funds organised outside India) are
regulated by SEBI through its applicable regulations and by the Reserve Bank of India
through the exchange control regulations, namely Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017.
 Foreign Direct Investment- Foreign investors typically route their investment in
private equity through an FDI vehicle. The annually issued FDI consolidated policy to
regulate these investments along with the Foreign Exchange Management (Non-Debt
Instruments) Rules 2019(the Non-Debt Rules).
 Foreign Venture Capital Investor- For foreign investors to invest in VC undertakings
they need prior registration with SEBI under SEBI (Foreign Venture Capital Investors)
Regulations 2000 (the FVCI Regulations). The process typically takes 20 to 30 days
from the date of application. To promote job creation and innovation, the RBI allowed
 for 100 per cent FVCI investment in start-ups. The Non-Debt Rules also allow FVCIs to
purchase equity, equity-linked instruments or debt instruments issued by an Indian
start-up, irrespective of the sector in which it is engaged.
 Sector-Focused Funds-SEBI has notified the Securities and Exchange Board of India
Real Estate Investment Trusts Regulations 2014 (the REIT Regulations) to regulate any
investments in the Real Estate sector and the SEBI Infrastructure Investment Trusts
Regulations 2014 (the Infrastructure Regulations) for the infrastructure sector. An
infrastructure investment trust (InvIT) and a REIT must be registered with SEBI to
conduct their business.
 Infrastructure Investment Trust-Similarly, an InvIT is a trust formed under the Trust
Act and registered under the Registration Act. An InvIT is created by the sponsor of
the trust, the ownership of the property vests in the trustee and the beneficiaries are
the unitholders of the InvIT. A sponsor creates a trust, and a trustee is appointed to
hold the assets of the trust in benefit of the unitholders.
6)Rules for angel funds
Yash Kumar Singh
K239

1Angel investment is a form of equity financing where the investor supplies funding in exchange
of taking an equity position in the company.
2. Angel funds invest in very early-stage businesses providing capital for start up or expansion.
3. Angle investment is much more risky than debt financing as unlike a loan, invested capital
does not have to be paid back in the event of the business failing.

4. The angel fund will have a say in how the business is run and will also receive a portion of the
profits when the business is sold.

5. Angel funds in India are regulated by Sebi under the umbrella regulations for Alternative
Investment Funds (AIFs).

Rules for angel funds

3.1. Increase in maximum investment amount in venture capital undertakings 3.1.1.Regulation
19F(2) of AIF Regulations states that “Investment by an angel fund in any venture capital
undertaking shall not be less than twenty five lakh rupees and shall not exceed five crore rupees.”
3.1.2. It is recommended by the working group that this requirement of maximum investment
amount by an angel fund in any venture capital undertaking (“VCU”) may be increased from Rs.
five crores to ten crore. It is stated by the group that due to fast changing angel investing
ecosystem wherein angels are investing much higher amounts, such increase is needed to provide
more opportunities to angel funds. This provision also precludes angel funds from participating in
follow on rounds of venture capital undertakings if the limit of Rs. five crore rupees has been
exhausted.
3.1.3. Such increase in maximum investment amount in a venture capital undertaking will provide
angel funds more flexibility to invest in venture capital undertakings. 3.1.4.Proposal It is proposed
to amend the requirement of maximum investment amount by an angel fund in any venture
capital undertaking from five crore rupees to ten crore rupees. 3.2. Minimum corpus of an angel
fund

3.2.1. Regulation 19D (2) of AIF Regulations states that “An angel fund shall have a corpus of at
least ten crore rupees.”
3.2.2. It is recommended by the working group that considering the fact that angel investments
are as low as twenty-five lakhs rupees, it is restrictive for angel funds to start with a corpus of ten
crores rupees. The requirement of having at least ten crore rupees corpus may be reduced to five
crore rupees.
3.2.3. Such reduction in minimum corpus size will enable the angel funds with smaller corpus to
register with SEBI. This will help the start-up ecosystem to raise more funds from angel funds set
up with such reduced corpus.
3.2.4. Proposal It is proposed to amend the requirement of having at least ten crore rupees corpus
to at least five crore rupees. 3.3. Maximum period to accept funds from angel investors

3.3.1. Regulation 19D (3) of AIF Regulations states that “angel funds shall accept, up to a maximum
period of three years, an investment of not less than twenty five lakh rupees from an angel
investor.”
3.3.2. It is recommended by the working group that the maximum period for accepting funds from
investors should be increased to 5 years as angel funds may not be able to offer sufficient number
of investment opportunities in the angel investor’s area of interest and thus angel investors may
be mandatorily required to invest in available investment opportunities within three years. During
this mandatory period of three years, there would be scenarios wherein enough opportunities are
not available for investment by angel funs due to various reasons such as macro-economic
outlook, slow growth economic trends, etc.
3.3.3. Such increase in maximum period to accept funds from investors will provide angel funds
more time to identify opportunities and invest in VCUs.
3.3.4. Proposal
It is proposed to amend the requirement of maximum period for accepting funds from an angel
investor from three years to five years.
3.4. Filing of scheme memorandum to SEBI by angel funds
3.4.1. Regulation 19E(1) of AIF Regulations states that “The angel fund may launch schemes
subject to filing of a scheme memorandum at least ten working days prior to launch of the scheme
with the Board.”
3.4.2. It is recommended by the working group that considering the construct of the Angel Fund,
where a written approval is sought from each angel investor prior to making an investment and a
detailed private placement memorandum is already filed with SEBI at the time of registration, it
is onerous to file a scheme memorandum with SEBI at least ten working days prior to launch of
the scheme. Accordingly, it is recommended that angel funds may file an intimation with details
on the specific investment with SEBI within ten days of launching scheme.
3.4.3. Proposal
It is proposed to replace the requirement of filing of scheme memorandum to SEBI by angel funds
with requirement of filing term sheet containing material information, as may be specified by SEBI,
regarding the scheme to SEBI within ten days of launching scheme. 3.5.Amendments in
Regulations 19D(4) and 19(E)4 of AIF Regulations
3.5.1. Regulation 19D(4) of AIF Regulations states that “Angel fund shall raise funds through
private placement by issue of information memorandum or placement memorandum, by
whatever name called.”, whereas Regulation 19E(4) of AIF Regulations states that “No scheme of
the angel fund shall have more than two hundred angel investors.”
3.5.2. Further, Section 42 (2)(ii) of the Companies Act, 2013 states that “private placement means
any offer of securities or invitation to subscribe securities to a select group of persons by a
company (other than by way of public offer) through issue of a private placement offer letter and
which satisfies the conditions specified in this section.” It is recommended by the working group
that the provisions of Companies Act are applicable only on companies and since the angel funds
are generally formed as Trusts, private placement rules, as prescribed in section 42 of the
Companies Act, 2013, should not be applicable on them.
3.5.3. The group, in order to get clarification on private placement provisions, has requested
amendment in AIF Regulations by inserting a proviso to Regulation 19(D)(4) and 19E(4) of AIF
Regulations as under: Provided that the provisions of the Companies Act, 2013 shall apply to the
Angel fund, if it is formed as a company.”
3.5.4. In this regard, it is noted that proviso to Regulation 10 (f) of AIF Regulations states that
“Provided that the provisions of the Companies Act, 1956 shall apply to the Alternative Investment
Fund, if it is formed as a company.”
3.5.5. Proposal The proviso to Regulation 10 (f) of AIF Regulations is applicable on all AIFs including
angel funds. Hence, a separate clarification by way of inserting a new proviso with respect to angel
funds is not required and hence, the proposal is not accepted.

3.6. Amendment in Regulation 19G (3) of AIF Regulations

3.6.1. Regulation 19G(3) of AIF Regulations states that “The manager of the angel fund shall obtain
an undertaking from every angle investor proposing to make investment in a venture capital
undertaking, confirming his approval for such an investment, prior to making such an investment.”
3.6.2.The working group has stated that this requirement is very onerous and adds to the lead
time for deal close. It is also superfluous and unnecessary as, in any case, each investor anyway
has to elect to participate in a particular investment in the Angel fund construct. Accordingly, it is
recommended that the need to obtain an “undertaking” be done away with and the
commitment/consent to invest (given electronically or in hard format) be considered as approval
& undertaking. Further, the Manager will give an undertaking to SEBI on a quarterly basis that
approvals from all investors were duly obtained.
3.6.3. In this regard, it is observed that, in case of angel funds, the manager of the angel fund
obtains an undertaking from every participating angel investor before making investment in VCUs.
The angel investors can have the discretion of participating in investment opportunities provided
by the angel fund and such discretion through undertaking ensures the protection of interest of
angel investors. Thus, obtaining undertaking from the angel investors by the manager of angel
fund ensures the agreed participation in the particular investment by such angel investor.
3.6.4. Proposal In view of the above, the said proposal may not be accepted.

3.7. Amendments in Regulation 23(2) of AIF Regulations

3.7.1. Regulation 23(2) of AIF Regulations states that “Category I and Category II Alternative
Investment Funds shall undertake valuation of their investments, at least once in every six months,
by an independent valuer appointed by the Alternative Investment Fund. Provided that such
period may be enhanced to one year on approval of at least seventy-five percent of the investors
by value of their investment in the Alternative Investment Fund.”
3.7.2. The working group has stated that given that angel investments are early-stage
investments, the growth in their valuation is not likely to be dramatic every six months. The
requirement of valuing investments once in six months is, therefore, onerous & unnecessarily
expensive. Accordingly, it is recommended that the minimum frequency for undertaking valuation
of investments should be increased to once a year in relation to angel funds.
3.7.3. In this regard, it is observed that since investment are made by Category I AIFs, including
angel funds, in unlisted securities, valuation of such securities less frequently will increase the risk
for the investors. Thus, the requirement of valuation at every six months allows angel investors to
remain updated about their investment in VCUs. Further, in terms of AIF regulations, AIF has the
discretion to increase the period of valuation with the consent of at least seventy-five percent of
the investors by value of their investment in the AIF.
3.7.4. Proposal
The proposal to increase the requirement of valuating investments from six months to one year
may not be accepted.

7.) RULES FOR SOVEIRGN WEALTH FUNDS

PALASH JAIN
K-221
The term ‘sovereign wealth fund’ (SWF) covers a wide spectrum of State-owned investment
vehicles which have in common to be funded from budget surpluses but which diverge in
purposes, strategies, assets, investment choice, and legal form. As their investment strategies
are mainly focused on foreign financial assets, this definition necessarily excludes those funds
which invest solely in domestic assets.
It is an investment fund which is primarily owned by the National Government. These funds
generally invest in financial instruments such as bonds, stocks, gold, and real estate.
The motives for establishing a sovereign wealth fund vary by country.

RULES:-

1. Deposit and withdrawal rules:

These determine the timing, amount and conditions for the sovereign wealth fund’s inflows
and outflows, either to or from the government’s main bank account. In some cases, these
rules are the operational form of a macroeconomic framework.
2. Investment risk limitations:
SWFs hold public assets to improve macroeconomic management or for safekeeping. As
such, governments should not be allowed to gamble with these funds and their asset
portfolios should reflect their purpose.
3. Institutional structure:
There should be a clear division of responsibilities between the legislature, president or
prime minister, the fund manager, the operational manager and external managers to help
funds meet their objectives and prevent corruption. Again, there is no standard solution,
but guidance can be found.
4. Transparency:
Disclosure requirements should be legislated. Bodies like parliaments, fiscal councils, and
the media cannot perform their oversight functions unless they have access to adequate
and verifiable information.
5. International co-operation should be maintained and can be build mutual trust and
keeps market open
6. SWF investment should be based on commercial grounds and should be not hold
geopolitical goals of the controlling government.
7. Greater the information disclosure by SEF’s about the fund size, investment
objective, institutional arrangements and financial information-asset allocation,
benchmarks and returns.