MANU/SMIS/0004/2023

Ministry : Securities and Exchange Board of India

Department/Board : Alternative Investment Fund and Foreign Portfolio Investors Department

Circular No. : SEBI/HO/AFD/PoD/CIR/2023/15

Date : 12.01.2023

Notification/ Circulars Referred : Circular no. CIR/IMD/DF/10/2013 dated July 29, 2013 MANU/SMFD/0020/2013;Circular no. CIR/IMD/DF/14/2014 dated June 19, 2014 MANU/SMFD/0006/2014

Citing Reference:
Circular no. CIR/IMD/DF/10/2013 dated July 29, 2013 MANU/SMFD/0020/2013  Referred

Circular no. CIR/IMD/DF/14/2014 dated June 19, 2014 MANU/SMFD/0006/2014  Referred

To,

All Alternative Investment Funds (AIFs)
All Custodians

Sir/Madam,

Participation of AIFs in Credit Default Swaps

1. SEBI (Alternative Investment Funds) Regulations, 2012 ('AIF Regulations'), have been amended and notified on January 09, 2023 to allow AIFs to participate in Credit Default Swaps ('CDS') as protection buyers and sellers. Copy of the notification is available at link.

2. Regulations 16(1)(aa), 17(da), 18(ab) and 20(11) of AIF Regulations enable AIFs to participate in CDS in terms of the conditions as may be specified by SEBI from time to time. In this regard, the following is specified:

A. Conditions applicable to Category I, II and III AIFs for buying CDS: