Speaking at the CII Mutual Fund Summit 2012, UK Sinha said that the market regulator is in touch with various regulators for formulating fresh guidelines; SEBI is also ready to provide capital for an SRO
SEBI Chairman UK Sinha, speaking at the eighth CII Mutual Fund Summit 2012 being held in Mumbai, said that the regulator has received a go-ahead from the Financial Stability & Development Council (FSDC) to formulate guidelines on distributor regulation. However, he did not specify any date for implementation.
In September last year, SEBI had circulated a concept paper which proposed to classify distributors as ‘agents’ and ‘advisors’. Agents will be entitled to commissions from AMCs while advisors will have to only work on getting fees from their clients.
On forming a self-regulatory organisation (SRO), SEBI said that it is ready to extend capital support for any organisation to become an SRO.
No re-introduction of entry load or variable load
The SEBI chairman said that the regulator has received recommendations from some stakeholders to re-introduce entry load but he ruled out any possibility of implementing the suggestion. He said that the majority of people have asked SEBI not to re-introduce loads.
Single-cheque mechanism proposed to SEBI
SEBI has also received suggestions on having a single cheque system for investments in mutual funds so that commissions are embedded at the time of investing. Mr Sinha also said that SEBI has received recommendations on having a share class structure in mutual funds as prevalent in foreign markets.
He also said that SEBI has received a recommendation on having fungibility in total expense ratios, i.e., AMCs will be able to utilise the expense within the total limit without any further segregation.
