SEBI has allowed mutual fund distributers to use recognized stock exchange platform to purchase and redeem mutual fund units directly from AMCs on behalf of their clients. Earlier, only stock brokers and clearing members were allowed to carry out such transactions.
However, the distributors cannot handle pay-in and payoutof funds on behalf of their investors. Stock exchanges have to put the necessary system in place so that pay-in and payout will be directly made to the account of investors. Similarly, units can be credited or debited directly from the demat account of investors.
In a circular, SEBI said, “In order to enable the mutual fund distributors also to leverage the stock exchange platform so as to improve their reach and mutual fund distributions, it has been decided to allow mutual fund distributors to use recognized stock exchanges infrastructure and purchases and redeem mutual fund units directly from the AMCs.”
The market regulator has said that the facility is available only for ARN holders; however, they should have to take permission from recognized stock exchange to carry out such transactions. The recognized stock exchange should grant permission to distributors on request of AMFI. AMFI will send its request on the basis of fee, code of conduct etc. Those ARN holders who have already taken permission from stock exchange can start executing such transactions.
Through the circular, SEBI said that the detailed operating guidelines for this facility should be provided to distributors by recognized stock exchanges, recognized clearing corporations and depositories. Both stock exchanges and clearing corporation can make necessary amendment to the existing byelaws, rule and regulations, SEBI added.
