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SEBI’s Whole Time Member Amarjeet Singh has directed fund houses to follow ethical standards in selling, advertising and marketing their schemes and focus on reducing instances of mis-selling.
He also asked fund houses to segregate their other business activities like PMS and advisory from mutual funds.
Singh was speaking at the Moneycontrol MF Summit held today in Mumbai.
Singh also said that SEBI has directed AMCs to put in place a mechanism to curb instances of front running and fraudulent transactions in execution of trades. In fact, AMFI in consultation with SEBI has specified detailed standards to set up such an institutional mechanism.
Here are other key highlights from this keynote address:
- Mutual funds have taken equity culture across the length and breadth of the country
- Ease of investment and increased financial literacy have contributed to the massive growth of MF industry
- There are lot of untapped opportunities for the MF industry considering the fact that over 50% of MF assets come from top 5 cities and 55 crore individuals have linked their Aadhaar and PAN as against 4.70 crore MF investors
- Every penny of IAP budget should be efficiently used to bring in more investors to the MF fold
- SEBI has encouraged fund houses to proactively discharge their stewardship responsibility. They can play a bigger role in ensuring healthy corporate governance practices in the ecosystem
- Self-regulation is key as the board and trustees of AMCs are the first level regulators. They are in better position to stop malpractice and misconduct
- Mutual fund units will come under insider trading norms from November 1
- SEBI has been leveraging technology to detect market abuse. It has substantially increased supervision and reduced potential risks or blind spots
- Fund houses should have robust stress testing exercises
- Fund houses should prepare themselves to deal with heavy inflows. Recently, a few fund houses were not able to allot same day NAV due to a surge in inflows
