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Post the ban on NFOs, the mutual fund industry is putting in a concentrated effort to get rid of the pooling system but it is not an easy affair given the involvement of several players including stock exchanges, payment aggregators, banks and even online payment platforms, say senior industry executives.
They say that the industry will need a complicated technological and legal framework to enable complete segregating of equity trading and mutual fund accounts of investors. "Stock brokers provide a single platform for equity trading and mutual fund investment. But SEBI now wants the two to be completely separate. This will require a lot of legal and technological changes from the brokers' end," said a mutual fund CEO.
Transactions in both equities and mutual funds from a single account provides an opportunity to brokers to recover their fees or charges. This is one of the reasons behind SEBI's ban on pooling accounts, say industry insiders.
As per a CEO of another AMC, the issue is stuck due to inaction from stock exchanges and brokers and SEBI should have acted against them instead of punishing AMCs.
In a press release, AMFI has said that it is working with all stakeholders to expedite the process. "We are confident of faster implementation owing to adoption of new-age technology and with the help of other stake holders such as Stock Exchanges and channel partners, so that we can further strengthen investor service and their evolving savings need towards newer mutual fund solutions," said AMFI Chairman A. Balasubramanian.
The regulator has given the industry time till July 1, 2022 to ensure complete discontinuation of pooling account system. However, the extension in timeline has come with a condition that AMCs will not launch any NFO till they comply with the regulation.
