In its board meeting today, SEBI allowed mutual fund distributors to take up limited purpose membership at stock exchanges for selling mutual funds.
Distributors will have to comply with less financial and compliance burden to use the infrastructure of stock exchanges for distribution & redemption of mutual funds, stated the SEBI press release.
“To reduce the financial and compliance burden on these limited purpose members requirements such as SEBI registration, compliance as member of stock exchange, paid up capital and base minimum capital etc., would not be applicable. However stock exchanges may prescribe suitable eligibility criteria in this regard including net worth requirements, membership fee etc. This limited purpose membership would be granted on the basis of ARNs, granted to mutual fund distributor by AMFI,” stated the release.
However, SEBI has not allowed these limited purpose members to handle pay in and pay out of funds as well as units on behalf of investors to eliminate any default risk. Pay in & payout of funds & units would be directly from/to the account of the investors.
Cafemutual had earlier reported about BSE’s plans to give mutual fund distribution license fee for Rs 10000. See here.
