Sebi panel to review 2009 MF changes

The Securities and Exchange Board of India (Sebi) has formed a seven-member panel chaired by Prashant Saran, wholetime member, to examine the mutual fund sector’s grievances on the abolition of entry loads in August 2009. It had its first meeting on Friday.
 
A panel member said: “It’s very exploratory. A lot of people have complained about the transaction costs. This is making people disinterested and move out of the industry. So, the panel will look at ways to address these issues.” He said the findings are expected to come in a “few weeks.”

OTHER ISSUES
Two key issues it would examine are the twin cheque system and the common account statements introduced by Sebi, with the associated transaction costs.
To distinguish the payment made to the distributor for his services, Sebi had mandated this be done separately. And, the regulator had pushed for a common account statement.
“We made our stand clear to Amfi that there should be a single cheque payment system. Even after two years of entry load ban, the distributors are finding it difficult to charge investors for the advice. We believe an investor should give a single cheque to the AMC and mention (overleaf) how much commissions he/she wants to pay to the distributors. A double cheque system only adds to the confusion,” said a CEO of a mid-sized fund house.

Source: Business Standard

KNOW YOUR DISTRIBUTOR (KYD)

It has been decided by AMFI to introduce Know Your Distributor (KYD) for Mutual Fund Distributors with effect from September 1, 2010, which would be similar to that of Know Your Client (KYC) for investors, requiring the distributors to submit mandatorily identity proof, address proof, PAN and bank account details with proof. It is also decided to introduce bio-metrics as a part of KYD process.

To start with, KYD norms will be applicable for fresh ARN registration and ARN renewal effective from September 1, 2010. The existing ARN holders would also be required to comply with KYD norms within 6 months i.e. by end of February 2011, failing which AMCs shall suspend payment of commission till the distributors comply with the requirements.

CAMS will be initially providing KYD facilities at 60 Point of Services (POS) which is expandable to more centers, if required.  CAMS has also agreed to provide this facility on temporary basis at places other than these POS if requested by us and if the number of distributors are not less than 50.The details of POS shall be uploaded on AMFI Website as well as on the website of CAMS shortly.

The KYD process is free of cost for the distributors.

Why:

Securities and Exchange Board of India (SEBI) has advised AMFI to review the existing registration procedure for Mutual Fund Distributors and initiate necessary action to strengthen the same to ensure correctness of information furnished in the registration application and also to have in person verification of the ARN holders.

AMFI has therefore decided to introduce Know Your Distributor (KYD) process for the Mutual Fund distributors with effect from September 1, 2010. The KYD procedure consists of document verification and Bio-metric process. The distributor is therefore required to apply for KYD simultaneously alongwith application for registration of ARN. Please click here for detailed process note and KYD application form for

1. Individual
2. Non Individual

Source: Amfi india

Birla Mutual fund is coming up with Nifty Exchange Traded Fund

August 30, 2010
Birla Sun Life Mutual Fund has recently filed a draft offer document with the Securities and Exchange Board of India (SEBI) to launch an open-ended 'Nifty exchange traded fund' (ETF). The fund will closely track the stocks represented in the S&P CNX Nifty.

ETFs can be cost-effective for investors as they charge a minuscule fund management fee compared to index funds, as compare to index funds, ETFs do not carry an entry or exit load.