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    Question

    What is the underlying reason for SEBI's permission to

    allow stock brokers and clearing members to park client funds in mutual fund overnight schemes?
    A To encourage investment in volatile markets Correct Answer Incorrect Answer
    B To promote cryptocurrency trading Correct Answer Incorrect Answer
    C To mitigate risks by investing in government securities Correct Answer Incorrect Answer
    D To discourage participation in clearing corporations Correct Answer Incorrect Answer
    E To prioritize investment in real estate Correct Answer Incorrect Answer

    Solution

    Capital market regulator SEBI has allowed stock brokers and clearing members to park client funds in mutual fund overnight schemes as they invest only in risk-free government securities Brokers and clearing members should ensure that the overnight schemes invest only in government bond, overnight repo markets and overnight Tri-party Repo Dealing and Settlement (TREPS). Such Mutual Fund Overnight Schemes (MFOS) units should be in dematerialised (demat) form and must necessarily be pledged with a clearing corporation at all times.

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