Securities and Exchange Board of India has scrapped the transaction charges paid to mutual fund distributors. This ends the provisions that permitted asset management companies (AMCs) to pay charges for investments exceeding a threshold.
"...SEBI Master Circular for Mutual Funds dated June 27, 2024, allows AMCs to pay to the distributor transaction charges, subject to a minimum subscription amount of Rs 10,000 brought in by such distributors." the regulator said in a circular on Friday.
Based on the feedback, SEBI observed that distributors, as agents of AMCs, are entitled to be remunerated by the AMCs, the 'charges or commission, as prescribed under rules, shall be done away with'.
Accordingly, the master circular -- which governed these charges -- have been deleted. This will come into force with immediate effect, the regulator said. This change is expected to simplify the distributor compensation process while maintaining transparency in the mutual fund ecosystem.
(With PTI Inputs)
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