Sebi to ban middleman pooling for mutual fund trades: The Tribune India
New Delhi, October 4
In order to protect the interests of mutual fund investors, Sebi on Monday announced the ban on the “intermediate pooling” of funds and units by mutual fund distributors, investment advisers, partners of mutual funds. distribution, platforms and other entities.
The new rule, which comes into effect on April 1, 2022, will not apply to registered Sebi portfolio managers.
In addition, portfolio management companies (SGAs) must put in place the necessary systems to ensure that fund and unit transactions relating to subscription and redemption take place directly between investor accounts and investor accounts. UCITS concerned. There will be no intermediate pooling, Sebi said.
In issuing a detailed circular on Monday, the regulator also said that AMCs will be required to compensate for losses suffered by a unitholder due to unauthorized transactions resulting from fraud, negligence or deficiency in law. part of AMCs.
Sebi said that it has been observed that on the basis of a bilateral agreement with AMCs, a few platforms pool clients’ funds into a nodal account and then transfer them to AMCs on the basis of one transaction. or a lump sum.
“AMCs should ensure that intermediary pooling of funds and / or units in any way by MFDs, IAs, MFUs, Channel Partners or any other service provider / platform- forms, whatever their name, be discontinued for MF transactions, ”the circular said.
MFDs are mutual fund distributors, RNs are investment advisers, and MFUs are mutual fund utilities.
The latest decision was made after discussions with stakeholders and recommendations from Sebi’s mutual fund advisory board.
The regulator noted that AMCs should ensure that financial and non-financial transactions can only be executed if there is a service agreement between the relevant AMC and the service provider / platform.
“MFDs, IAs, MFUs, Channel Partners and other entities (including online platforms) facilitating mutual fund transactions will not accept single money order payment or issuance of money orders. / instruments on their behalf for mutual fund transactions, ”Sebi said.
In addition, investor check payments must be made to the respective MF plans only.
The Association of Mutual Funds of India (AMFI), in consultation with Sebi, will issue guidance for AMCs on mitigating fund mix risk at the level of payment aggregators / payment gateways involved in mutual fund transactions shift.
According to Sebi, AMCs will ensure that detailed information at each stage of the relevant transaction, including rejection, is made available to all stakeholders involved in the transactions at the same time. Only the information relating to payments necessary to ensure reconciliation and traceability will be made available to payment aggregators.
“The responsibility for complying with the provisions of the PMLA and not authorizing the use of third-party bank account payments remains with AMCs,” Sebi said.
For the redemption of mutual fund units, there will be a two-factor authentication for online transactions and a signature method for offline transactions.
“AMC would be required to compensate losses, if any, suffered by a unitholder, in the event of unauthorized transaction (s) in the unitholder’s portfolio due to fraud / negligence / insufficiency from AMC, an AMC employee or persons / entities whose services have been used by AMC, including platform providers, MFDs, RTAs, MFUs and partners of distribution, whether or not the fraud is reported by the unitholder, ”says the circular.
However, any transaction not authorized by investment advisers while providing services to Unitholders would not be considered a responsibility of the AMC.
To strengthen control over the verification of key investor information, such as bank details, email id and mobile phone number, AMFI will issue guidelines in consultation with Sebi. —PTI