Mumbai: Mutual fund distributors will soon be able to access the infrastructure of stock exchanges to do their business, while a single Self Regulatory Organisation (SRO) would also be put in place for their oversight.
The proposals in these regards were approved today by the SEBI's board, which also cleared a proposal for allowing mutual fund houses to trade directly on the debt segment of the stock exchanges.
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.
SEBI may soon finalise the deadline for accepting such applications.
SEBI is of the view that a single SRO for all mutual fund distributors will help minimise complexities and duplications and also lower costs, while it would also help in a better oversight by the various regulatory authorities.
The Board also decided to allow MF distributors to take limited purpose membership of stock exchanges with lesser financial and compliance burden to use this infrastructure for distribution and redemption of MF units, SEBI said.
To reduce the financial and compliance burden on these limited purpose members requirements such as SEBI registration, compliance as member of stock exchange, paid up capital and Base Minimum Capital etc, would not be applicable.
However stock exchanges can prescribe suitable eligibility criteria in this regard including net worth requirements and membership fee, SEBI said.
To address the possible risk of default by these limited purpose members, they will not be allowed to handle pay in and pay out of funds as well as units on behalf of investor.
In another decision, the board also approved a proposal to permit the asset management companies managing schemes of mutual funds to take membership of debt segment of stock exchanges under 'Proprietary Trading Member' category.
"However, this will be only to undertake trades directly on behalf of such schemes managed by them," SEBI said.
Presently, mutual funds are not allowed to appoint a custodian belonging to the same group, if the sponsor of the mutual fund, or its associates hold 50 percent, or more of the voting rights of the share capital of such a custodian, or where 50 percent, or more of the directors of the custodian represent the interests of the sponsor or its associates.
The board has decided that the custodian in which the sponsor of a mutual fund or its associates are holding 50 percent or more of the voting rights of the share capital of the custodian, would be allowed to act as custodian subject to certain conditions.
These include the sponsor having net worth of at least Rs 20,000 crore at all points of time, and 50 percent or more of the directors of the custodian shall be those who do not represent the interests of the sponsor or its associates.