India's market regulators have given arbitrage mutual funds more flexibility in position management to introduce liquidity to underperforming stock closing collective auctions. People familiar with the matter revealed that regulators allow such funds to hold temporary unhedged positions of up to 1% of the product size. The rules have been relaxed to allow funds to keep temporary position mismatches without having to maintain complete hedging at all times to attract capital for closing auctions with poor participation after the launch on August 3.

India's market regulators have given arbitrage mutual funds more flexibility in position management to introduce liquidity to underperforming stock closing collective auctions. People familiar with the matter revealed that regulators allow such funds to hold temporary unhedged positions of up to 1% of the product size. The rules have been relaxed to allow funds to keep temporary position mismatches without having to maintain complete hedging at all times to attract capital for closing auctions with poor participation after the launch on August 3.