In a fresh twist on e-commerce distribution space, SEBI is likely to ask e-commerce distributors either to develop their own skill sets like IFAs or work in a tie up model with IFAs (market place model).
SEBI has reportedly decided to come out with the guidelines on distribution of mutual funds through e-commerce websites like FlipKart, Amazon and Snapdeal at a meeting of SEBI’s Mutual Fund Advisory Committee.
Ananta Barua, Executive Director, SEBI said that there would be three routes through which mutual fund would be distributed on e-commerce – distributor route (both online and offline facility), only distribution route (online distribution) and advisor route (direct route). He was speaking at the Assocham 14th Mutual Fund Summit held recently in Delhi.
Barua said, “We want a system where even though we may allow e-commerce, there will be same requirements which we are debating should be applicable because if they sell a product then there is an executive who is an employee, he needs to be certified and he should sell those products that are suitable and all three routes - distributor route, only distribution route and ‘all through’ advisor route are being debated.”
Though Barua has not explained these three routes in details during his speech, AMC officials who attended this event told Cafemutual that they have read the distribution route as both online and offline service which include post sales services, only distribution may have only online sales service and advisor route may be like robo advisory that will charge a fee from investors.
“Since e-commerce websites work on market place model in which they have a tie up with multiple sellers, these websites may be allowed to have a tie up with IFAs who already have skill sets and expertise on advisory and distribution,” said a senior official who was present at this event.
Two months back, SEBI has constituted a committee headed by Nandan Nilekani to suggest measures to reduce cost structure in mutual funds. Sources said that the committee has already met three times and is likely to give its recommendations soon.
Earlier in July, SEBI Chairman UK Sinha had said, “The e-commerce industry in India has grown by CAGR of over 48% in the past few years. In fact, in the coming decade, it is expected to grow at a CAGR of 45%. India is a market where a large number of people use such platforms to buy goods and services. I am sure all of us would have participated in at least one e-commerce transaction. Why can’t mutual fund industry provide a similar service to investors? 99% of people are dependent on someone’s help to buy mutual fund schemes. There is some disconnect between the ability of customers using such technologies and what MF industry has provided.”
Sources privy to the development the development said that SEBI is looking to introduce a third plan in mutual funds called e-commerce plan in addition to regular and direct plans. Also, the TER of such schemes would be somewhere between direct plan and regular plan, added sources.
