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A number of regulatory changes have come into effect recently, from increasing investor participation to changing intermediary compliance and training. Let’s look at the changes that are most important to MFDs:
- SEBI has allowed Research Analysts (RAs) to offer model portfolio recommendations. Additionally, Registered Investment Advisers (RIAs) can now register as RAs to offer such portfolios
- SEBI has proposed a micro-SIP of Rs. 250 to encourage small-ticket investments. To incentivize distributors, MFDs and execution-only platforms (EOPs) will receive a Rs. 500 incentive for bringing in such SIPs. However, this payout will be given only after 24 SIP installments and applies only to new investors. Micro-SIPs will be limited to growth plans of equity funds
- Under the MF Lite Regulations, SEBI now allows fund houses to launch passively managed hybrid index funds and ETFs. Each AMC can introduce one index fund and one ETF in the balanced, equity-oriented, and debt-oriented categories
- SEBI has made it mandatory for RIAs, client-facing employees of RIAs and principal officers of RIAs to complete a new refresher course for renewing their certification
- Investment advisers can now charge up to Rs. 1.51 lakh per family under the fixed fee model, an increase from the previous Rs. 1.25 lakh cap
- SEBI and NISM have introduced a 10-hour self-paced eLearning course on municipal bonds. It includes video lectures, quizzes, and case studies to help individuals understand how municipal bonds finance development projects
- To improve transparency, fund houses must now disclose risk-adjusted returns (RAR) along with the standard compound annual growth rate (CAGR) returns. This will help investors understand the level of risk taken by an equity scheme to generate returns
- Starting March 1, 2025, investors can appoint up to 10 nominees. They must provide a personal identifier (PAN, driving license, or last four digits of Aadhaar) but no document copy is required. Investors will also need to provide mobile numbers and email IDs, which was not mandatory before. Notably, these new rules will not apply to existing investors unless they wish to update nominations
- AMFI has signed an MoU with Indonesia’s mutual fund association (AMII) to exchange best practices, insights, and strategies. The collaboration will focus on governance standards, investor protection, data analytics, research, product innovation, and risk management
- SEBI has also clarified regulations around who MFDs can associate with. MFDs cannot associate with entities that:
- Provide securities advice or recommendations without SEBI registration.
- Make return or performance claims without SEBI approval.
- Permitted associations include:
- Investor education providers who do not give specific security recommendations.
- Marketing/advertising agencies not involved in prohibited activities.
- SEBI-registered entities working within their approved scope.
- Non-SEBI regulated entities (such as banking and insurance) that do not engage in prohibited activities.
MFDs found violating these rules may face penalties, registration suspension, or debarment.
