SEBI has instructed RTAs, AMCs and digital platforms not to promote their apps to investors who are already managed by distributors.
"Mobile apps or websites owned by RTAs or digital platforms etc. shall not be promoted to such investors who are not acquired/ managed by them directly. RTAs may communicate directly through their own channels, only as needed in terms of SEBI regulations," notes SEBI's recent circular.
Earlier, there were no restrictions on RTAs, AMCs and digital platforms to promote their distribution apps to clients who are managed or acquired by other advisors and distributors. Since these entities have access to investors’ data, they could leverage it to promote their own services.
A few months back, SEBI had constituted a working group on digital platforms - mutual funds. Based on the recommendations of this committee, SEBI has issued various guidelines to create uniformity and increase transparency in the digital transaction space. Here are some key guidelines:
- Disclosure of daily NAV, scheme portfolio and other scheme related details in standard format across digital platforms and websites. AMFI will prescribe this standard format soon
- Standard messaging formats for all types of communication - forward and reverse feeds, financial and non-financial. RTAs in consultation with industry participants will develop such formats
- AMCs and RTAs to ensure parity in accepting transactions across various channels regarding NAV applicability and cut-off timings
- AMCs, RTAs and industry participants having investors data should respect and adhere to users data privacy. The user data available with them cannot be shared between group entities managing multiple business or products. Further, products and services of group companies cannot be cross-marketed
- AMCs and RTAs to ensure that all investor service requests, whether financial or non-financial are dealt with in a uniform manner digitally
- For investments routed through exchange platforms, both in demat and non-demat modes, AMCs to ensure compliance with provisions related to payment of transaction charges to mutual fund distributors
- RTAs to develop procedures to ensure digitization of non-financial transactions with due consideration of provisions of prevention of money
- RTAs to notify planned downtime to all platforms in advance by 7 calendar days. ln case of unplanned downtime, alert notifications to be sent instantly to all platforms including expected time for recovery
The market regulator has asked the digital platforms to implement these instructions effective November 2, 2020.
