Mutual fund industry is set for a slew of regulatory changes, including setting up of a single SRO (Self Regulatory Organisation) for all distributors, who would also be allowed to access the stock exchange platforms.
Besides, the fund houses may also be allowed to conduct proprietary trades on the debt segments of stock exchanges, while separate changes are also in works to further strengthen the newly launched independent debt platforms of the bourses.
The proposed measures are expected to be discussed by the capital markets regulator SEBI at its board meeting here tomorrow, sources said.
SEBI is of the view that a single SRO for the mutual fund distributors would help remove complexity and duplication and also lower the costs while it would also help in a better oversight by the various regulatory authorities.
Some entities have already evinced interest in setting up SROs for the distributors of mutual fund products and a single applicant would be selected from amongst them by SEBI after getting formal applications from them.
SEBI may soon finalise the deadline for accepting such applications and the same would be communicated to the interested parties, sources said.
Regarding the separate debt segment of stock exchanges, SEBI would also consider various steps for their growth and the proposals being considered include mutual funds being allowed to trade on them as ‘propreitary trading members’.
Besides, the mutual fund distributors may also get access to infrastructure at the stock exchanges by getting their memberships, a senior official said.
However, according to stock exchanges — BSE, NSE and MCX — the distributors are not keen to take membership due to the financial and compliance burden of being a member.
Keeping in mind these views, SEBI is likely to deliberate on alternatives such as admitting subsidiary floated by mutual funds as member with the stock exchange with distributors effectively being authorised persons of these subsidiaries.
These subsidiaries would be responsible towards the investors and for complying with the regulatory norms.
The regulator might also suggest distributors to take ’limited purpose membership’ of the stock exchanges that would involve lesser financial and compliance burden.
Under this category the distributors may be allowed to use the infrastructure at the bourses to deal in mutual funds but may not be permitted to handle payout and pay-in of funds on behalf of the investors.
For enabling mutual funds to directly trade on the debt platform, SEBI plans to permit Asset Management Company (AMC) appointed by these fund houses to take the membership under the ‘propreitary trading members’.
Further, SEBI is likely to bring in some changes to the broker norms related to the debt segment such as a deposit of Rs 10 lakh for the new clearing members and an annual fee of Rs 50,000, among others.