The Securities and Exchange Board of India?s (Sebi) move to allow a new cadre of distributors, such as postal agents and retired government officials, to sell units of simple mutual fund schemes has not taken off as expected.
Eight months after a circular in this regard was issued by the market regulator with a view to widen the network of MF distributors, less than 200 distributors have done their Amfi registration under this category, according to sources.
?Bringing in new cadres is a long-term goal and won’t happen overnight,? said a person associated with MF industry body Amfi. ?The separate examination module for the new cadres was ready only by February. It will take time to convince the new section of potential distributors to give the module, pass the exams and register.? AMFI has waived off registration fees for first-time distributors till June 30, which could be extended till the end of this year, according to sources.
Sources said new cadre registrations have been delayed owing to a lack of coordination between Amfi and National Institute of Securities Markets (NISM), a public trust established by Sebi.
?There has been no coordination between Amfi and NISM in this regard, and the former has written to Sebi sort things out,? said a senior official of a mid-sized fund house.
?NISM is insisting that compliance officers of fund houses certify that the new cadre of distributors are qualified to sell the products, which was not originally mandated by either Amfi or Sebi. Even existing agents don’t need any such certification from compliance officers,? the official further added.
Amfi declined to comment on the issue, while NISM officials could not be reached for comment. Some fund officials reckon it would be difficult to find enough simple diversified equity products that can be sold by the new cadre of distributors.
?Typically, AMCs tend to manage products that are performance-oriented and these tend to be a bit complicated and not simple,? said Himanshu Pandya, VP & head, products and communication, ICICI Prudential Asset Management. He, however, added that index products that mirror the Sensex or Nifty moves could easily be sold by the new cadre.
According to the Sebi circular dated September 13, the new cadre of distributors would be able to sell simple MF schemes that could include diversified equity schemes, fixed maturity plans (FMPs) and index schemes but with returns equal to or better than their scheme benchmark returns during each of the last three years.
The new cadre could include postal agents, retired government and semi-government officials (class III and above or equivalent), together with retired teachers and bank officers with 10 years experience, intermediaries or agents engaged in distribution of financial products such as insurance, PPF, National Savings Scheme products and business correspondents appointed by banks. However, they are required to pass a Series V-B : Mutual Fund Foundation Certification Examination or Mutual Fund Foundation CPE Program designed by NISM.