Amfi to meet Sebi over commission

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Mumbai | Updated: May 26, 2016 8:10:20 AM

Mutual fund trade body, Association of Mutual Funds in India (Amfi) will soon meet markets regulator Sebi to discuss the commission disclosure rule for distributors. For the past few weeks, there has been protest from various distributors and independent financial advisors (IFAs) to roll back the rule that mandates fund houses to disclose the commissions paid to distributors in their consolidated account statement (CAS) sent to investors.

Mutual fund trade body, Association of Mutual Funds in India (Amfi) will soon meet markets regulator Sebi to discuss the commission disclosure rule for distributors. For the past few weeks, there has been protest from various distributors and independent financial advisors (IFAs) to roll back the rule that mandates fund houses to disclose the commissions paid to distributors in their consolidated account statement (CAS) sent to investors.

“Distributors have met Securities and Exchange Board of India (Sebi) officials regarding the matter and the regulator might look into the query raised by them. However, as a trade body we also represent fund houses and we would meet Sebi and ask them to modify the rules. We are not against transparency, but showing commission paid to distributors might result in ‘pass back commission’ system in mutual fund industry,” said a senior member of Amfi.

Mutual fund trade body is likely to suggest Sebi to allow fund houses to give commission in percentage terms and not in absolute terms. In the circular dated on March 18, 2016, Sebi in order to increase transparency of information to investors had asked all the fund houses to provide the amount of actual commission paid by AMCs/mutual funds (MFs) to distributors (in absolute terms) during the half-year period against the concerned investor’s total investments in each MF scheme intheir half yearly CAS. Sebi had also clarified that, the term ‘commission’ here refers to all direct monetary payments and other payments made in the form of gifts / rewards, trips, event sponsorship’s etc. by AMCs/MFs to distributors.

Sebi had also asked to disclose scheme’s average total expense ratio (in percentage terms) for the half-year period, of both direct plan and regular plan, for each scheme where the concerned investor has invested in. To scarp the rule, distributor community had met officials from the Sebi few days ago and given them feedback and had requested for more time to adopt to changes on disclosures.

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