SEBI has the power to review and excerise the role of mutual fund distributors business compliances. As a part of mutual fund business done by the distributors they have to obey the orders of SEBI.
Recently SEBI amended norms on mutual fund distributors. As per SEBI-
- If the mutual fund distributor is actively managing his business, he should not suggest “Direct Plans” to his clients. This would be applicable on the distributor portals too!
- If any entity is engaged in doing portfolio management services(PMS) he should suggest “Direct Plans” only. This would be applicable to non-individuals, corporates,stock-brokers engaged in mutual fund business too.
- Stock-Brokers, corporates and non-individual financial advisors are not entitled to receive brokerage from the mutual fund companies/asset management companies as they have to suggest Direct Plans only from hereon!
Mutual Fund distributors who are actively doing their business can view their customers transaction data only if they suggest “Regular Plans”
While corporates, stock brokers can suggest “Direct Plans”, they can view their customers data only under “Direct Plan” and they will not be entitled to receive any brokerage from the amc.
All individuals, corporates, stock-brokers, sub-brokers, agents and distributors must have a valid ARN(Amfi Registration Number)and EUIN(Employee Unique Identification Number)to do mutual fund business. Be remember all the entities who are dealing with clients must comply with SEBI rules and they have to be abide by the terms and conditions of AMFI from time-to-time.