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Risk-o-Meter
In line with SEBI’s detailed guidelines for calculating the Risk-o-meter for MF schemes to promote transparency and accountability, we have developed a portal where AMCs can log in with their credentials and upload month-end portfolio data. The data is processed through inbuilt automation, and the final Risk-o-meter report is shared with the client via email. We also provide continuous support, as regulatory compliance is of utmost importance. The fund's Risk-o-meter is also disclosed in the monthly factsheet.
Potential Risk Class Matrix (PRC)
SEBI, to foster transparency and accountability, issued detailed guidelines for the calculation of PRC for debt schemes. PRC is calculated on a daily basis and monthly basis. We have developed a platform for the same where an AMC will log into the same platform with their credentials and upload the portfolio data (daily and monthly). The portfolio data will be processed through inbuilt automation and the final PRC report will be shared with the client over mail. We also provide continuous support for the same, as regulatory compliance is of utmost importance.
Stress Testing
To foster transparency and accountability, SEBI issued detailed guidelines for stress testing calculations in debt and hybrid schemes. ICRA Analytics has developed a portal for the same where an AMC will log into the portal with their credentials and upload the portfolio data. The portfolio data will be processed through inbuilt automation and the Stress Testing report will be shared with the client over mail.
Scheme Summary Document
ICRA Analytics has developed a portal for Scheme Summary Document, which is now used by AMCs for filing offer documents of mutual funds. We provide the necessary support for streamlining the dissemination of relevant information to investors.
Prevention of Market Abuse
In line with SEBI notifications and AMFI’s recommended standards for preventing market abuse (including front-running, insider trading, and fraudulent transactions), ICRA Analytics has developed an on-premises application deployed on AMCs’ servers. AMCs regularly upload the required data, as specified by SEBI, in a defined format after logging in with their credentials.
Each AMC subscribes to relevant stock exchange data needed for calculations. Both AMC and exchange-level trade data are uploaded in a secure environment. Once uploaded, the system processes the data automatically and triggers Level 1 and Level 2 alerts. Data confidentiality is fully maintained, with ICRA Analytics having no access to or control over the uploaded data
FAQs
Industry-wide services include:
1. Providing applications for Regulatory reporting or monitoring which includes
- RIskometer / Risk Band for Mutual Funds and SIFs
- Stress testing of debt portfolios of the schemes
- Calculating potential risk class matrix of debt funds
- Preparing Scheme Summary Document for mutual funds and Investment Strategy Summary Document for SIFs
- Calculating Portfolio Overlap
- Monitoring suspicious trade practices, if any
2. Securities Level valuation
3. Mutual Fund and SIF Factsheets
4. Industry reports (like market updates across various asset class, fund performance analysis etc)
5. Data and Analytical Solutions .
These services help AMCs meet regulatory requirements, improve operational efficiency, and make informed business decisions.
Risk-o-Meter is a regulatory-mandated disclosure tool that indicates the risk level of a mutual fund scheme. It helps investors to understand the risk level associated with a fund, improving transparency and supporting more informed investment decisions.
In line with the regulatory requirements, ICRA Analytics has developed a cloud-based centralized platform for calculating and managing the Risk-o-Meter of mutual fund schemes based on their monthly portfolio disclosures. Through this platform, Asset Management Companies (AMCs) are required to upload the portfolios of all their schemes in a predefined format. The application subsequently computes the portfolio risk scores and corresponding Risk-o-Meter band in accordance with the methodology prescribed by the regulator.
Mutual Funds are required to categorize debt schemes within a matrix based on two key risk parameters: maximum interest rate risk, measured through the scheme’s Macaulay Duration, and maximum credit risk, measured through the scheme’s Credit Risk Value (CRV). The primary objective of this framework is to transparently disclose the maximum level of risk that a fund manager is permitted to undertake within a debt scheme.
For classification and nomenclature purposes, 3×3 risk matrix has been prescribed by the regulator, where each cell represents a specific combination of interest rate risk and credit risk levels. ICRA Analytics application helps Mutual Funds to calculate PRC levels of schemes
In accordance with regulatory requirements, Mutual Funds are required to undertake periodic stress testing of their portfolios, particularly for debt schemes, as a key component of their risk management framework. The purpose of this exercise is to strengthen risk oversight by providing a structured mechanism to assess the potential impact of plausible adverse market events on portfolio performance. Stress testing helps identify underlying portfolio vulnerabilities, evaluate potential risk exposures, and serves as an early warning tool for monitoring the overall health and resilience of portfolios under various stress scenarios.
ICRA Analytics’ Stress Testing Module enables users to seamlessly upload scheme portfolios and conduct stress testing on a regular basis. The platform generates detailed risk assessment outputs, and facilitates ongoing monitoring to support regulatory compliance and informed risk management decisions.
The Scheme Summary Document (SSD) is a standalone scheme-level disclosure document, prepared in a prescribed format, that must be updated either on a monthly basis or whenever there is a change in any of the specified data point , whichever occurs earlier. This requirement has been introduced pursuant to regulators guidance.
The SSD is designed to enhance investor awareness and transparency by providing disclosures on 53 key data points at the scheme level. The requirement is applicable across all mutual fund schemes and aims to facilitate standardized and comprehensive dissemination of scheme-related information to investors.
To support Mutual Funds in meeting these reporting obligations, ICRA Analytics has developed a cloud-based Platform. The application enables Mutual Funds to efficiently manage, validate, and generate SSD disclosures in a standardized format, thereby simplifying compliance and ensuring timely and accurate reporting.
Pursuant to the framework issued by the Regulator for the prevention of market abuse, mutual funds are required to establish robust institutional mechanisms for identifying, monitoring, and preventing activities such as front-running, insider trading, fraudulent transactions, and other suspicious trading patterns. The objective of these requirements is to enhance market integrity, strengthen governance practices, and safeguard investor interests.
In line with these regulatory expectations, ICRA Analytics has developed an on-premises application, deployed within the AMC's environment, to support the proactive identification and monitoring of potential instances of market abuse. The solution enables surveillance of trading activities, assists in detecting suspicious transactions based on predefined parameters, and facilitates timely investigation and compliance reporting by the concerned teams.
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