MUMBAI: Market regulator Sebi plans to start regulating mutual fund distributors to make the industry safer and bring down incidences of miss-selling. The plan, now in its formative stage, is to start regulating large distributors, or those who are above a threshold limit, and then based on the experience slowly expand to include other distributors.
"We are looking into distributor regulation, but this will be in a non-disruptive manner," UK Sinha, chairman, Sebi, said at a mutual fund industry conference. "To begin with, this might be for a limited number of large distributors," Sinha added. He was addressing the plenary session at CII's annual Mutual Fund Summit here.
The regulator also plans to look into the stringent advertisement rules that fund houses have to adhere to, which will have lesser but more relevant disclosure than now. Sinha, who during his tenure in the finance ministry had worked on the pension fund regulations bill, advised the fund industry to come out with proposals on how they can tap the pension market in India.
The Sebi chief also said that the regulator was working on having a uniform know your client (KYC) standard for all the market intermediaries under his regulatory purview. Sebi is also planning to look at the track record of fund managers and disclose the same to investors, which could help, especially the retail investors, in taking an informed decision while investing in MF schemes.
To bring in first time investors and grow the mutual fund business, Sebi plans to find some way to remunerate MF distributors. For the top officials of the fund industry who were present at the conference, it was a welcome break, with the regulator assuring it all the support to develop the industry and penetrate deeper into the country. Last year, when former Sebi chief CB Bhave had addressed the same event, some had hoped for a reversal of the entry load, at least partially. However, there was not much from Sebi's side. This year, however, as the Sebi chief extensively cited global fund industry data to put forward his point that the Indian fund industry has a long way to go, chiefs of fund houses came out on a positive note.
"Two things stand out in today's speech. For one, there is a huge need to get new investors into the MF category which is being addressed in the form of distributors' remuneration," said Jaideep Bhattacharya, group president & CMO, UTIMF. "And the proposal for common KYC across all capital market products will bring in lot of convenience to investors," he added.
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"We are looking into distributor regulation, but this will be in a non-disruptive manner," UK Sinha, chairman, Sebi, said at a mutual fund industry conference. "To begin with, this might be for a limited number of large distributors," Sinha added. He was addressing the plenary session at CII's annual Mutual Fund Summit here.
The regulator also plans to look into the stringent advertisement rules that fund houses have to adhere to, which will have lesser but more relevant disclosure than now. Sinha, who during his tenure in the finance ministry had worked on the pension fund regulations bill, advised the fund industry to come out with proposals on how they can tap the pension market in India.
The Sebi chief also said that the regulator was working on having a uniform know your client (KYC) standard for all the market intermediaries under his regulatory purview. Sebi is also planning to look at the track record of fund managers and disclose the same to investors, which could help, especially the retail investors, in taking an informed decision while investing in MF schemes.
To bring in first time investors and grow the mutual fund business, Sebi plans to find some way to remunerate MF distributors. For the top officials of the fund industry who were present at the conference, it was a welcome break, with the regulator assuring it all the support to develop the industry and penetrate deeper into the country. Last year, when former Sebi chief CB Bhave had addressed the same event, some had hoped for a reversal of the entry load, at least partially. However, there was not much from Sebi's side. This year, however, as the Sebi chief extensively cited global fund industry data to put forward his point that the Indian fund industry has a long way to go, chiefs of fund houses came out on a positive note.
"Two things stand out in today's speech. For one, there is a huge need to get new investors into the MF category which is being addressed in the form of distributors' remuneration," said Jaideep Bhattacharya, group president & CMO, UTIMF. "And the proposal for common KYC across all capital market products will bring in lot of convenience to investors," he added.
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