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SEBI has proposed to introduce a new incentive structure for MFDs for bringing in new investors from B30 cities and women investors irrespective of their location based on their PAN.
The market regulator has proposed that AMCs should pay a flat fee of 1% of the size of the first application amount or the amount of SIP committed subject to a maximum incentive of Rs.2000. Such a structure will be applicable for bringing in new investors from B30 cities or women investors irrespective of their location. However, both cannot be applicable simultaneously, said SEBI.
SEBI further clarified that this additional incentive structure is subject to claw back if such an investor redeems money within a year’s time.
This onetime fee will come from IAP corpus of 1% that stays with AMCs to create awareness among people.
Further, AMCs will have to opt for this if they want to compensate their distribution with additional incentive. Such a structure should be applicable across scheme categories other than schemes having duration of up 1 year like overnight fund, liquid fund, ultra-short duration fund and low duration fund.
Also, AMCs can consider paying a higher percentage of commission for inflows from B30 cities compared to commission for inflows from T30 cities.
In another proposal, SEBI said that there will be no incentive on churning. If an MFD moves his client’s asset from scheme A to scheme B, he will either get the same commission structure or such a commission cannot exceed 25% of the committed structure for the first three years.
Finally, SEBI has proposed discontinuation of transaction charges by opt in distributors.
