AMFI board is likely to take up this issue in its next meeting.
A national distributor association has approached AMFI’s ARN committee to seek clarity on the AUM transfer rule.
In order to bring uniformity in the practices followed by AMCs while transferring assets from one ARN to other ARN, AMFI had come out with fresh set of guidelines in January 2014. Read here.
One of the key changes introduced by AMFI in these guidelines is related to transfer of assets to an ‘online platform’. Online distributors in this case are platforms such as FundsIndia and iFAST which run a sub broker model.
In the revised guidelines, AMFI has introduced certain exceptions to AUM transfer rule.
While AMFI has allowed IFAs to partially transfer their assets to an ‘online distributor’ without having to surrender their ARN, there is no clarity on whether IFAs can do partial AUM transfer to the likes of NJ India or Prudent.
In case IFAs wish to transfer assets to a ND like Prudent or NJ India, they have to surrender their ARN and do full transfer of assets. Logically, if IFAs surrenders their ARN, how can they operate as sub-brokers?
“Transfer should be of full assets and after
the transfer, transferor distributor should cease to exist / function and his
ARN code should be surrendered to AMFI for cancellation,” states AMFI best
practice circular dated January 2014.
National distributors say that there is no clarity on the definition of the term ‘online distributor’. “There is no clarity whether we are also categorized as online distributors. We do have an online buying/selling facility for our sub-brokers. AMFI has allowed IFAs to partially transfer their assets to ‘online distributors’ without defining who is an online distributor,” says the CEO of a national distribution firm.
Sources said that AMFI board is likely to take up this matter in its next meeting. They say that the ARN committee is in principle in favour of distributor’s request.
AMC officials say they carefully evaluate each AUM transfer case to check the authenticity of request. “We are particular about AUM transfer cases. It should not happen that a big fish is trying to eat small fish,” says a committee member.
