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  • MF News SEBI asks fund houses to follow best practices circular in letter and spirit

    SEBI asks fund houses to follow best practices circular in letter and spirit

    SEBI has learnt that a few AMCs are not adhering to AMFI best practices guidelines.
    Nishant Patnaik May 30, 2018

    In a recently held meeting with CEOs of a few fund houses, SEBI has asked fund houses to follow the best practices circular in letter and spirit, say two CEOs who met the SEBI chief two weeks ago.

    A CEO of a large fund house said that SEBI had asked fund houses whether they were adhering to AMFI best practices circular on the commission guidelines. In fact, the regulator has asked AMFI to ensure that all its members adhere to the circular in spirit as well.

    Another CEO told Cafemutual that AMFI might come out with another best practice circular pushing for further rationalisation of the commission structure. “SEBI has been pushing fund houses to reduce cost and hence, AMFI may rationalise the commission structure of distributors,” he said.

    A CEO, who is not on the AMFI board, said that it does not make sense for them to adhere to the best practices circular if decision-makers flout the norms. Even fund houses, which are complying with best practices guidelines on upfront commission in spirit, would back out if other members flout the norms, he added.

    The issue of compensation given to RIAs and online channels to sell direct plans was also raised in the meeting.

     

     

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    6 Comments
    Ratnesh · 5 years ago `
    Why AMFI itself promot direct plan in their advertisement mutual fund sahi hai compaion.
    One of ad say buy direct plan of mutual fund, this is not fair to all exisiting distributors, as a SRO body AMFI CAN'T DO THIS...
    Ratnesh · 5 years ago
    https://youtu.be/2T8ObAaGvTc


    That amfi worst ad
    Prashant · 5 years ago
    AMFI is not SRO it is a mutual fund lobby or a cartel. SEBI even gave IMFI(promoted by AMFI) a license for SRO illegally and flooring all norms. Supreme court had to strike that down. Why would SEBI do that? The answer is clear that AMCs wants to make extra profits with the help of SEBI which ideally SEBI should not allow but SEBI actually is participating in this malicious activity. Why SEBI wants everyone to go direct is because AMCs don't want to pay distributors and wants the whole pie for themselves so RIA model which is a failed model is forced onto us. They are going to discuss RIA compensation means that they will pay RIA to recommend their schemes which is against the very basic principle of the model which now SEBI will permit because AMCs can not get enough business in the direct schemes on their own. Also in the garb of rationalization of brokerage they just want to reduce it to make extra profits. Any reduction in TER is straight away passed on to us completely and AMCs never shells out even one paisa of the reduction. This clearly means that they want to eradicate us and earn everything for themselves. In future AMCs will go to SEBI and tell them that they can not survive with such low TER and SEBI will pass a resolution that AMCs can increase it and that also to any extent. AMCs especially AMFI(lobby which should be dissolved because how can you allow lobbies to function when you want to remove so called "middleman" which in this case is distributors who is the single most important person to safeguard investor's interest and guide him correctly and genuinely.
    Prashant · 5 years ago
    Also who is AMFI to write the best practices circular. They are a lobby so why should they be allowed to dictate terms? Also brokerage is something which markets always decides and not regulators or lobbies. Then why this illegal activity carried out in our country just because this is done by a regulator? They should all be dissolved because they are not benefitting the investors but themselves.
    Reply
    Dayananda P K · 5 years ago `
    "Penny wise pound foolish"- As a regulating body (SEBI,AMFI) and business bodies in mutual fund(AMCs) - they are all supposed to see -how the mutual fund can penetrate to common man in India.
    The Industry penetration level is very low in India - need for distributors is critical for industry.
    expanding and Attracting distributors community is need of the hour.
    It is well known that MUTUAL FUNDS are the best investment avenue for common man ( passive investor).
    Not all distributors are doing wrong selling , most of the wrong selling happens by institution distributors/brokers.
    Wish concerned learned professionals have a holistic view and do the needful for mutual fund industry.
    Sanjay Bangar · 5 years ago `
    Could not understand why SEBI & AMFI did not intervene much before 4-5 years when Mutual Fund Industry was just penetrating. Is it something like they were waiting for good days to come for MFs and then they will find out a way to eradicate MFDs.
    If AMFI and SEBI is promoting direct plans, why he is allowing new distributor to join the industry. Just because they don't want to loose the revenue coming from ARN fees. They have reduce ARN renewal tenure to increase there revenues in short span.
    And of course for SEBI, MFDs are the most corrupt professionals in India, so all restriction for us only. Rest all are very compliance oriented.
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