What arrangement did SEBI give

According to market regulator SEBI, under the system in force till now, distributors were paid transaction charges for bringing investments of ₹ 10,000 or more. This rule was included in the master circular dated 27 June 2024. However, after the new review, SEBI found that distributors, who play the role of agents of the AMC, should be paid directly in the form of commission or fee, and not through transaction charges. On this basis, the relevant provisions of the master circular have now been completely removed.

Transparency will be promoted in the industry

SEBI believes that this change will promote transparency in the mutual fund industry and simplify the payment system of distributors. This circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Regulation 52(4A) of the SEBI (Mutual Funds) Regulations, 1996 with the objective of protecting the interests of investors, promoting development and regulating securities market.

Who are mutual fund distributors?

Mutual fund distributors are financial intermediaries or private individuals who help investors invest in and maintain mutual funds. They are often also called mutual fund agents. These distributors play an important role in the sale and distribution of mutual fund products to individual investors. According to Bajaj Finance, these agents are registered and regulated by the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India i.e. AMFI.

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The move comes after SEBI recently proposed sweeping changes in the disclosures made by listed companies as well as listing requirements. The proposal is based on the recommendations of a committee headed by former SEBI whole-time member S. K. Mohanty. Speaking at a CII event on Monday, SEBI chief Buch said a single ‘filing’ on the exchange will become a reality very soon.

He said that under the proposed changes, the information (filing) given to one exchange will be automatically shared on the other exchange. Apart from this, Buch said that investors will soon be able to start investing in SIP from Rs 250 per month. Aditya Birla Sun Line Mutual Fund is preparing to launch the first such SIP in the country. So far SIPs with a minimum of Rs 500 per month are available. Buch refused to comment on Real Estate Investment Trust (REIT) and said that rules for simplification of such units are in place.

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What did you say on reet

She said, ‘If I say even one word on REIT, I will be accused of conflict of interest.’ Buch has said this at a time when US short selling company Hindenburg Research has raised questions about possible conflict of interest related to her and private equity firm Blackstone in a report. Hindenburg has claimed in the report that Buch and her husband Dhawal Buch had made undeclared investments in obscure foreign funds in Bermuda and Mauritius. These are the same funds that Vinod Adani allegedly used to embezzle money and increase the share prices of the group’s companies. Vinod Adani is the elder brother of Adani Group chairman Gautam Adani.

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SEBI had inspected the company to see whether IIFL Securities Limited (IIFL) meets the necessary rules to be a brokerage company.

The inspection was conducted for the period from April to July, 2022. Subsequently, the regulator issued a show cause notice to IIFL Securities on April 15, 2024. SEBI said in its 35-page order that the noticee (IIFL Securities) has accepted the allegations made in the show cause notice regarding the monthly and quarterly settlement of client funds and securities, stating that there were some technical deficiencies in it.

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SEBI’s adjudicating officer Barnali Mukherjee said in the order, “I find that the circular specifically instructed the brokers to settle the accounts and issue the statement on time. However, the noticee failed to do so.”

Though the noticee has now taken corrective action, it is found that it has failed to dispose of funds and securities on monthly/quarterly basis.

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There is a relief news for mutual fund investors and demat account holders. The Securities and Exchange Board of India (SEBI) said in a circular issued on June 10 that it will not freeze the mutual fund portfolio or demat accounts of those investors who have not provided information related to their nominees.

Apart from this, investors holding securities in physical form will now be eligible to receive any payment such as dividend, interest or redemption of securities. Along with this, investors will be entitled to file a complaint or request any service from the Registrar and Transfer Agent (RTA) even if they do not choose the ‘nomination option’.

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Earlier, SEBI had set a deadline of June 30 for all existing individual mutual fund holders to provide nominee details or opt out of nomination. Non-compliance with the rule could have resulted in a ban on withdrawals from their accounts. However, SEBI said in a circular issued on Monday that keeping in mind the ease of compliance and convenience of investors, it has been decided not to ban mutual fund accounts with demat accounts for not providing ‘nomination option’ for existing investors or unit holders.

The system will continue for new investors.

The market regulator said that payments that were currently stopped due to listed companies or RTAs not providing the ‘nomination option’ can now be settled. Along with this, SEBI clarified that the system of mandatorily providing the ‘nomination option’ for demat account/mutual fund folio to all new investors and mutual fund unit holders will continue.

SEBI issued format

The regulator has asked the depository participant, AMC or RTA to encourage demat account holders or mutual fund unit holders to update the ‘nomination option’ by sending messages on a fortnightly basis through email and SMS. To update the regulator, the name of the nominee, the nominee’s shareholding and relationship with the applicant will have to be disclosed. SEBI has also issued a format for providing the option of nomination and exit from nomination in demat accounts and MF folios.

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New Delhi. Market regulator SEBI on Wednesday decided to make the process of direct payment of shares into the customers’ account mandatory. This step has been taken to increase operational efficiency and reduce the risk of securities of customers. The Securities and Exchange Board of India (SEBI) said in a circular that it will be effective from October 14.

Currently, the clearing corporation credits the payment for securities to the broker’s account. It is then credited to the demat accounts of the respective client. SEBI has decided after extensive consultations with the stock exchanges, clearing corporations and depositories, “For payment, the clearing corporation will directly credit the demat account of the respective client.”

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This suggestion given to the Clearing Corporation

Further, the Clearing Corporation should provide a mechanism for the trading member or clearing members to identify the outstanding securities and shares financed under the margin trading facility.

SEBI has suggested that if there is any shortfall at the ‘position’ level, then the trading member or the clearing member should settle it through the auction process. Apart from this, in such cases, the broker should not charge any fee to the client other than the fee levied by the clearing corporation.

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The Securities and Exchange Board of India ( SEBI ) has made changes in the Internet-Based Trading rules. According to SEBI ‘s rules, now a stock broker will get approval for internet-based trading within 7 days. Earlier, a stock broker used to get approval within 30 days.

Why did SEBI take this decision

SEBI has taken this decision so that stock brokers can trade easily. Under the internet-based trading rule, now the broker will have to take permission from the stock exchange to use the internet-based trading rule service. The broker will have to apply for permission.

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SEBI has issued a circular for internet-based trading rules. According to the circular, the stock exchanges had to inform the brokers about their decision within 30 days, but now they have to inform the brokers within 7 days.

Also, SEBI has done away with the existing requirement of periodic confirmation of internet-based trading (IBT) data by stock brokers before it is published by the stock exchanges. Now, the stock exchanges will publish IBT data based on the details of IBT terminals provided by the brokers.

The decision has been taken after SEBI received a request from the Industry Standards Forum (ISF) of stock brokers regarding internet-based trading. SEBI said that the new guidelines will come into force with immediate effect.

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According to the new rule, now the market cap of companies will be calculated over a period of six months instead of daily. The market fluctuates daily. In such a situation, the market cap of companies changes every day.

Market experts believe that the market capitalization of a listed entity fluctuates on a daily basis depending on the market dynamics and hence, the average of the market capitalization figures over a reasonable period (six months) of the listed entity. Will reflect market size more accurately.

The changes came following the recommendation of an expert committee headed by former whole-time member of SEBI SK Mohanty to boost ease of doing business. The purpose of this amendment of SEBI is to specify a defined period for calculating the average market capitalization.

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The Securities and Exchange Board of India had issued a notification regarding this on May 17. According to this notification, the new rule will come into effect from December 31, 2024. Now the compliance ranking will be based on average market capitalization from July 1 to December 31, with December 31 as the cut-off date.

SEBI said regarding amendment in LODR norms

Every stock exchange will prepare a list at the end of this year i.e. 31 December 2024. Those companies will be included in this list, in which the institutions will be ranked on the basis of average market capitalization from July 1 to December 31. If the ranking of a company changes every three years, then the new provision will not apply to that company. This will provide relief to institutions experiencing fluctuations in market capitalization.

Further, SEBI has given relaxation in respect of filling of vacancies of Key Managerial Personnel (KMP) and has extended the time limit from the existing three months to six months in some cases.

In cases where the listed entity is required to obtain approval of regulatory, government or statutory authorities to fill such vacancies, these should be filled by the listed entity as soon as possible and in any case not earlier than six months from the date of the vacancy.

As per current LODR rules a listed company is required to inform the stock exchanges about financial results, board meetings for certain resolutions like share buyback, fundraising etc. within 2-11 working days.

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The Securities and Exchange Board of India (SEBI), the body that regulates the stock market, has simplified the rules for those holding securities in paper form. Under this, the provision of banning securities without PAN, KYC (Know Your Customer) details and ‘nomination’ has been removed.

SEBI said in a circular that the purpose of this initiative is to simplify the rules. This step will come into effect with immediate effect. This decision has been taken after receiving suggestions from Registrar Association of India and investors.

Signature was mandatory

Under the rules, it was mandatory for all those holding securities in physical form in listed companies to provide signature for PAN, nomination, contact details, bank account details and the respective ‘folio’ number.

SEBI had in May said that ‘folios’ in which any of such documents will not be available on or after October 1, 2023, are required to stop issue registration and ‘share transfer agents’ (RTAs). While amending the circular issued by the regulator in May, SEBI said that the word ‘freeze’ has been removed.

What did SEBI say

SEBI said, “On the basis of the report received from the Registrar Association of India, suggestions received from investors and ban on shares under the Benami Transactions (Prohibition) Act, 1988 and or Anti-Money Laundering Act and related matters.” …to reduce administrative challenges, it has been decided to abolish the above provision.

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In a relief to holders of physical shares, market regulator SEBI has done away with the requirement of freezing these without PAN, KYC details and nomination. Securities and Exchange Board of India ( SEBI ) issued a circular regarding this. According to this circular, this step has been taken with the aim of simplifying the rules and it will come into effect immediately.

This decision has been taken after receiving feedback from Registrar Association of India and investors. Under the rule, it was mandatory for all holders of physical shares of listed companies to furnish PAN, nomination, contact details, bank account details and specimen signatures for their respective folio numbers.

SEBI had said in May that folios whose details are not available after October 1, 2023, will be frozen by the Registrar of Issue and Share Transfer Agents (RTAs). Amending the circular issued in May, SEBI said that the reference to the word freeze has been removed.

Why did SEBI change the rules?

SEBI said that they have taken this decision to make share trading easier. After the change in this rule, the unexpected challenges faced by investors will be reduced to a great extent. When folios were frozen, investors had to face many problems. SEBI has taken this decision after suggestions received from investors.

SEBI had issued a circular in May this year. In this circular he had removed the reference ‘freezing/frozen’. The decision was taken after consultation and feedback from the Registrar Association of India and investors.

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According to the information received by CNBC TV18, a decision can be taken soon. At present, some percentage is charged as fee on the basis of different types of schemes size and assets under management (AUM).

How to be charged

With many actively managed mutual funds failing to beat their benchmark indices, SEBI is preparing to propose a new category of mutual fund schemes with performance-linked fees. FYERS Head of Research Gopal Kavalireddy said that the proposal is similar to the charge structure of Portfolio Management Services (PMS), under which mutual funds will be able to charge advance fees. PMS is a professional financial service where the equity portfolio is managed by skilled portfolio managers and stock market professionals with the help of a research team.

what will be its impact

Kavalireddy believes that this regulation has been prepared keeping in mind the investors, which can prove to be effective in providing higher returns. He said that for some time SEBI has been making changes in the investment rules to benefit the investors. This new proposal seems correct in view of the present circumstances. Because some mutual fund schemes have performed poorly over a long period of time while some have given better returns as compared to top PMS schemes. Sourav Basu, head of wealth management at Tata Capital, said the initiative would encourage fund managers to generate better returns for investors.

However, in the meantime Basu also talked about its negative point. Told that fund managers may take undue risk to earn higher returns and earn higher fees, which may later affect investors. Vinayak Magotra, founding member, Product at Centricity, said investors may find it difficult to understand such a fee structure. This may increase confusion, due to which the participation of investors may decrease.

Basu said it is important to carefully consider the potential risks and benefits before deciding to invest in funds that charge such fees. He further said that it is also necessary to carefully evaluate the track record and investment strategy of the fund manager.

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The Securities and Exchange Board of India (SEBI) has barred Course Work Focus and its owner Shashank Hirwani, Capital Research owner Gopal Gupta and Cappers owner Rahul Patel from participating in the securities market for six months.

Raised over Rs 96 lakh from investors

In two separate orders passed by SEBI, SEBI found in its investigation that these companies were engaged in unauthorized investment advisor services without obtaining certificates as investment advisors. According to the market regulator, Coursework Focus and Hirwani had collectively raised over Rs 96 lakh from investors during March 2018 to July 2020.

Apart from this, Gupta and Patel together collected Rs 60.84 lakh from investors between June 2014 and November 2019. Sebi, in its final order passed on Wednesday, said that by such actions the companies have violated the IA (Investment Advisor) rules. SEBI, in its order, has directed the companies to refund investors’ money paid for such services within three months.

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