Listen to this article
From October, RTAs have been submitting a report to AMFI in which they share details of MFDs who have indulged in splitting of MF transaction to earn higher transaction fee on a monthly basis within 5 days from the end of the month.
However, RTAs did not find any erring MFDs over the last two months who have split the MF application to charge transaction, said two senior officials from RTAs. One of the officials of a leading RTA said, “We are filing nil report to AMFI for the past two months as no distributor splits application to charge transaction fees.”
A few months back, AMFI said that it will suspend ‘opt in’ distributors who split application to charge transaction fee multiple times for six months from doing fresh business. This has come after AMFI received a communication from SEBI to keep an eye on instances of splitting of transactions by MFDs.
If RTAs find erring distributors, they have been asked to recover the transaction fees from erring MFDs and credit it to investors awareness fund. In addition, AMCs will have to issue units of MF schemes in lieu of such deduction.
Distributors can levy a transaction charge of Rs.150 for getting a new investor and Rs.100 from existing investors if they mobilize Rs 10,000 or above. In SIPs, transaction charge is deducted in 4 instalments starting from the second month provided the total commitment amount is Rs.10000.
‘Opt in’ norms say that distributors are not supposed to split investments to earn more transaction charges.
