In a move to regulate the mutual fund distribution business, the Securities and Exchange Board of India (Sebi) today said it has notified regulations to set up a Self Regulatory Organisation (SRO) to monitor distributors of mutual fund and portfolio management products.
"Sebi hereby appoints the date of this notification as the date on which the regulations shall come into force in relation to distributors engaged by asset management companies of mutual funds and distributors engaged by portfolio managers," the regulator said in its notification dated January 8.
In August, last year, Sebi in its board meeting had approved the proposal made by its Mutual Fund Advisory Committee (MFAC), to set up an SRO to regulate the mutual fund distribution business.
The decisions followed concerns about mutual fund distributors in India not being regulated and there having various complaints against them for mis-selling of products to the investors.
Presently, the distributors need to register with Association of Mutual Funds in India (AMFI) and their registration can be cancelled by AMFI for violation of a prescribed code of conduct or for any other malafide practice.
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