Global regulatory trends will drive the future of the Indian mutual fund industry, said G Mahalingam, Whole Time Director, SEBI, according to a press release issued by CII.
Speaking at the 12th CII Mutual Fund Summit held recently in Mumbai, Mahalingam pointed out the need to view growth in India’s mutual fund industry from the perspective of global regulatory trends. He further pointed out that in the present positive scenario; there was a need to factor in aspects, which could influence future growth.
He expressed his concerns over the reduced liquidity that could affect inflows into mutual funds. “The US Fed tightening cycle may come in March or April next year and the impact of that on Indian markets would be very significant,” he added. Pointing out the inter-connect between mutual funds, banking, insurance and pension funds; he raised a cautionary note, saying that any reduction in liquidity would obviously have its impact.
On fee versus commission, Mahalingam said that the aspect of fees vis-à-vis commission needs to be considered when one mentioned future growth potential, he said. Currently, the market regulator is evaluating global practices in the advisory business before finalizing the RIA regulations.
In an earlier industry event, Mahalingam had said, “We are actually studying what is happening in other jurisdictions. UK, for example, has come out with the report on fee vs commission and they have clearly put forth the impact of this shift. We are closely looking at it and seeing what fits best for India.” Mahalingam was signalling to UK’s Retail Distribution Review (RDR) report conducted to review the impact of segregation of advised (commission) and non-advised portfolios (direct).