As always, SEBI was proactive in 2021 to safeguard the interests of mutual fund investors and ensure the growth of the industry. The regulator brought in a plethora of changes in mutual fund regulations and introduced several new concepts in 2021.
Here is a collection of all the top regulatory developments this year:
'Skin in the game' made mandatory for top MF employees
In April, SEBI asked AMCs to pay at least 20% of the total net salary to key employees in the form of mutual fund units.
SEBI said that the move aims to align the interests of key employees with that of the unitholders.
Introduction of risk class matrix
In June, SEBI introduced the concept of Risk Class Matrix for debt funds. The matrix defines the maximum risk a fund house can take while managing a debt fund.
Introduction of electronic gold, silver ETFs
In September, SEBI introduced two new options for mutual fund investors — electronic gold and silver ETFs.
The final rules for launch of silver ETFs were published in November.
Concept of ‘Accredited Investor’ becomes a reality
SEBI approved the proposal to introduce the concept of 'Accredited Investors' in India in June. The move opened the doors for financial service providers to introduce customised investment products for sophisticated clients.
'Swing pricing' in debt schemes
This year, SEBI introduced the concept of swing pricing for debt schemes.
Swing pricing is adjustment of NAV in such a manner that if outflow is higher than pre-determined level, the NAV goes down for investors redeeming MF units. Similarly, the NAV price goes up if investors invest more than pre-determined level.
AMCs asked to introduce approved methodology to arrive at MFDs commission
In a revision to the risk management framework, SEBI directed fund houses to introduce an approved methodology to determine commission structure of their distributors.
'Skin in the game' norms tweaked for MFs
SEBI did away with the existing 'skin in the game' norms for mutual funds in June. The regulator said that fund houses need to invest in schemes based on the risk level as opposed to '1% of NFO' rule for all schemes.
Reduction in registration and renewal fees for RIAs
In January, SEBI reduced the registration and renewal fees for both individuals and corporates.
The registration fee was brought down to Rs. 3000 and Rs. 10,000 for individuals and corporates respectively.
SEBI tightens investment norms for debt funds
In March, SEBI put a cap on exposure to debt instruments having special features like convertible bonds and perpetual bonds. Debt funds are now allowed to invest only up to 10% in bonds having special features.
Industry gets a common platform in MF Central
RTAs KFintech and CAMS together introduced a common platform called MF Central for mutual fund investors in September.
The platform allows investors to view all their mutual fund investments at one place. At present, the platform facilitates non-financial transactions like updating email id, change in address etc. Going forward, investors will also be able to execute financial transactions.
Faster merger and rollover of MF schemes
In July, SEBI said that fund houses can go ahead with change in fundamental attributes, merger of schemes, rollover of existing close end funds and conversion from close ended to open ended and vice versa if they if they do not hear from the regulator within 21 days.
