The regulator may ask for information related to sales practices followed by these distributors
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Mumbai: Market regulator SEBI wants to regulate distributors in a phased manner, starting with ‘large’ distributors.
“We will be dealing with the large distributors first. We are looking towards disclosure based compliance. But our attempt would be to regulate the distribution industry in a non-disruptive manner,” said U K Sinha, Chairman, SEBI at the CII MF Summit held yesterday.
However, the definition of ‘large’ distributors was not spelt out nor was a time frame given.
Market participants say that SEBI may seek information related to sales practice, client acquisition methods and other documents from these distributors.
“It is difficult for SEBI to begin with the unorganized distributors. It is easier to ask for information from banks or national distributors as they cover thousands of investors. We are ready to suggest SEBI some areas of disclosure which would be friendly to both investor and distributors,” said a sales head of a large fund house.
The mutual fund industry has around 80,000 registered ARN holders, out of which close to 43,000 distributors are KYD compliant so far. It has been reported that banks and national distributors account for 63 per cent of equity funds market share and IFAs 26 per cent.
