SEBI Scraps Transaction Charges For Mutual Fund Distributors With Immediate Effect
SEBI's latest move is expected to simplify the distributor compensation process while maintaining transparency in the mutual fund ecosystem.
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.
The market watchdog said that the verdict came after carrying out a public consultation on May 2023 and an industry consultation in June during the current year. As part of the earlier framework, SEBI mentioned that the distributors would be charged if they contributed a minimum subscription amount of Rs 10,000.
"...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)
