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Online investment platforms have welcomed the SEBI’s new consultation paper in which it has proposed that direct plan investment platforms will have to decide if they represent investors or AMCs.
The proposed norms say that online investment platforms like Coin by Zerodha, ET Money, Kuvera, Groww and Paytm Money will have to become an agent of investors or an agent of AMCs. While agents of investors will have to charge fees directly from investors, agents of AMCs can get commission in the form of transaction fees.
A senior official from the leading investment platform believes that the move will bring much needed clarity on the business model of online investment platforms. “In a way, the move will give players like us an option to clearly define the business model. While I strongly believe that opting to become an agent of AMCs will be more beneficial for investors, it is still very early to comment on this. Also, there is a clear arbitrage between industry platforms like MF Central and investment platform like us, which indicates it makes more sense to charge AMCs.”
Mukesh Kalra, CEO, ET Money welcomes the SEBI’s consultation paper and said that it will help the online investment platforms to grow business. He said, “It's a welcome move by SEBI and plugs the gap where there are no specific norms for execution-only investment platforms. It has been carefully defined and we welcome the openness of SEBI to consult the industry to define a sustainable framework. It also provides a principally correct way to segregate roles of entities based on their value addition in the ecosystem"
A CEO of a large investment platform requesting anonymity feels that SEBI should put other industry platforms like MF Utilities and MF Central under the purview of EOP to ensure level playing field. “Since there is no advice involved in investment platforms, it makes no sense to charge fees from investor towards advisory services. Clearly, becoming an agent of AMCs make more sense for our investors. However, if there is arbitrage between EOPs and other platforms, it will get difficult for EOPs to grow,” he said.
Gaurav Rastogi, CEO, Kuvera feels that the move may not have any material impact on the business of online platforms. He said, “We should wait for more details to come out before making any judgement call as still a lot of things are not clear.” He, however, believes that investors will still prefer online investment platform over industry platforms. He said, “For many reasons, including ease of use, transaction efficiency, superior user experience and availability of tools and data help investors make informed choice.”
