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MF News SEBI allows MFs to charge 2bps of scheme AUM from AMC book to fund operational expenses

SEBI allows MFs to charge 2bps of scheme AUM from AMC book to fund operational expenses

These expenses could be ‘small in value but high in volume’.
Nishant Patnaik Mar 10, 2019

SEBI has allowed fund houses to charge up to 2bps of the scheme AUM or actual cost whichever is lower from AMC book for operational expenses such as registration of SIPs, payment gateway charges, transaction platform charges, annual custody fees, call centres fees, RTA NFO charges, CKYC charges, KRA charges and so on.

However, SEBI has clarified that these charges have to be small in value and high in volume. In fact, SEBI has asked AMFI to make a list of these expenses in consultation with the market regulator through best practices circular. AMFI is expected to submit its recommendation soon.

SEBI said, “To have uniformity in charging expenses attributable to the scheme, which are not specifically covered in terms of SEBI regulations 1996, but are very small in value and high in volume. AMFI is advised to issue the list of expenses as mentioned in December 07, 2018 email. Such expenses can be paid out of AMC books at actual or not exceeding 2 bps of respective scheme AUM whichever is lower.”

Further, SEBI has cautioned that if they found AMCs misusing of this facility, they will take necessary action against such AMCs. SEBI said, “Misuse of the carve-out, if any, shall be viewed very seriously and necessary action against AMCs including withdrawal of the said carve-out facility may also be considered.”

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6 Comments
Lovkesh Aggarwal · 2 weeks ago
Hi i am from b30 city and i am a small ifa.same many small ifa like me struggling from daily expenses.so stop changing daily structures.we are already fighting with expenses, client arguments,direct platform,amc. et money advertising shows us like ifa are thief who stole 25 lacks from your hard money.
Robin · 2 weeks ago
Mr. Aggarwal you are right. I am also small ifa b30 city . new sip registration for Clint. travel charge and other charge paying to ifa pocket.
RAJENDRA PRASAD VERMA · 2 weeks ago
in mutual fund business we are facing big trouble from going downward brokerage specially those broker who do no believe in churning of AUM. mr. Lovkesh Aggrawal is absolutely right.in all over india mutual fund distributors 4300 is holding 25 crore and above AUM. 12.5 Crore to 25 crore AUM having 4384 distributors. 1.25 crore to 12.5 crore AUM holding 22116 distributors & 1crore to1.25 crore AUM holding 2350 distributors. It is very sad that we are dedicated for Mutual fund businesses with our client & businesses forwarded to AMCs provide services behalf of AMCs from small city like purnea bihar from far distance of AMCs & registrar offices. there is only way of process of applications by courier. Think one application of rs 1000/ sip having cost 100/ rs courier / photostat / form printing etc. in small city no any investment method like post office / life insurance agent charge any amount for services how sebi think that any client pay a agent cash rending services. After that if any client redeem before one year we face clawback .It is my bad luck that i am doing only mutual fund business since 2003. Now i am 59 year old & can not able to switch my profession to other business for livelihood.
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KULENDRA BHAISAL · 2 weeks ago
Small IFSs like us struggling on behalf of AMCs due to SEBI. It is like we are just doing Social services from our own pockets. And how long will it be tolerable. Now I'm planning to divert myself to other options or quit IFA business.
PRASHANT · 2 weeks ago
So everything I have been saying from 2017 is happening. SEBI allows AMCs to increase TER for regular plans and capping our commissions so fixing up a clear margin for AMCs. They won't allow commissions or IAPs from AMC book but they will allow them to use their book for their own expenses. All the regulations are just to benefit the AMC at the expense of Lakhs of distributors and crores of investors. How does these moves make the product cheap(which SEBI has been propogating which is just an eyewash). There sure is some multinational company wants to enter in India and wants competition to be eliminated and for this AMCs either influencing or bribing SEBI to bring about these regulations.....shame shame shame
Guruprasad Dandekar · 2 weeks ago
I have stopped doing business of mutual fund since it is becoming difficult for me to manage with daily expenses, SEBI should think on upfronting atleat in B30
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