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MFs to disclose big distributors on websites from 10th Nov

Fund houses, according to a SEBI circular, will have to disclose names of distributors having presence in more than 20 locations or those who have received over Rs1 crore commission in a year. They would also have to disclose the amount of commission paid to distributors

New Delhi: In order to improve transparency, market regulator Securities and Exchange Board of India (SEBI) has asked all mutual funds to disclose names of distributors, who receive commission in excess of Rs1 crore annually, on their websites, reports PTI.

Fund houses, according to a SEBI circular, will have to disclose names of distributors having presence in more than 20 locations or those who have received over Rs1 crore commission in a year. They would also have to disclose the amount of commission paid to distributors.

The disclosure, which would also be uploaded on the MF industry body Association of Mutual Funds in India’s (AMFI) website, would be mandatory from 10th November, it added.

The industry players feel that the move is aimed at tracking the payouts to big distributors like global and domestic banks and large independent financial advisors.

Distributors earn an upfront commission from the mutual funds in the first year which is generally higher for selling equity schemes and lower for debt schemes.

Further, they also earn a ‘Trail Commission’, which is a percentage of total business brought by the distributor. This commission is paid in the subsequent years and accounts for a huge earning for the distributors.

SEBI chairman UK Sinha had earlier this year said that the regulator would take steps towards regulating the mutual fund distributors.

The SEBI board had also decided that as a first step towards regulating distributors of MFs, selected distributors will be regulated through Asset Management Companies (AMCs) by putting in place the due diligence process to be conducted by AMCs.

“Our initial attempt is to regulate the distribution industry. We tried to cover those distributors whose contribution to the industry is material. We propose to cover about 50% of the asset under management (AUM) of the industry,” Mr Sinha said.

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Share prices indecisive: Thursday Closing Report

Nifty to continue in the range of 5,160 and 5,310

The market closed marginally in the positive as buying interest gained momentum in the second half of the trading day despite food inflation climbing to a nine-month high, and pressure from Europe. In yesterday’s closing report we mentioned that the Nifty is likely to remain range-bound and may move between 5,160 and 5,310. Today, the index moved in the range of 5,202 to 5,282. The market at present is indecisive and all eyes are on Greece’s decision of remaining in the euro-zone. The Nifty may continue to be in the range of 5,160 and 5,310. The National Stock Exchange (NSE) saw a volume of 54.30 crore shares today.

The market opened lower on the back of negative news from its Asian peers, which were trading lower in morning trade on worries about the worsening debt situation in Europe. The Nifty was down 16 points at 5,242 and the Sensex resumed trade at 17,431, a cut of 34 points over its previous close. IT, technology, auto and metal stocks were on the sellers’ radar in early trade. Trading in the negative terrain, the indices hit their intraday highs in the first 15 minutes with the Nifty going up to 5,253 and the Sensex rising to 17,447.

However, sustained selling pressure amid choppy trade pushed the indices further downwards as trade progressed. The indices touched their lows in noon trade as key European bourses pared opening gains and were trading in the red. At the low, the Nifty fell to 5,202 and the Sensex to 17,278.

A sharp recovery in US futures and European markets brought back buyers and short-sellers scrambled to square off, leading to a quick rally in the post-noon trade. The Nifty settled seven points higher at 5,266 and the Sensex closed at 17,482, up 17 points.

The advance-decline ratio on the NSE was negative at 776:842.

The broader indices ended flat with the BSE Mid-cap index at 6,251.21 (down 2.58 points) and the BSE Small-cap index (down 0.25 points) at 6,931.98.

The top gainers in the sectoral space were BSE Power (up 1.64%); BSE Realty (up 1.55%); BSE Oil & Gas (up 1.08%); BSE Capital Goods (up 0.68%) and BSE PSU (up 0.58%). The trailing sectors were led by BSE IT (down 0.73%); BSE Consumer Durables (down 0.58%); BSE Auto (down 0.39%); BSE Metal (down 0.35%) and BSE Fast Moving Consumer Goods (down 0.19%).

BHEL (up 4.18%); DLF (up 3.92%); Tata Power (up 3.23%); Bharti Airtel (up 2.15%) and Jaiprakash Associates (up 2.09%) were the major Sensex gainers. The main losers were Hindustan Unilever (down 2.08%); Tata Motors (down 1.74%); Sterlite Industries (down 1.70%); Tata Steel (down 1.23%) and ICICI Bank (down 0.98%).

The top performers on the Nifty were DLF (up 5.16%); BHEL (up 4.83%); ACC (up 2.81%); Reliance Infrastructure (up 2.73%) and Tata Power (up 2.69%). SAIL (down 2.66%); IDFC (down 2.34%); Hindustan Unilever (down 1.87%); Tata Motors (down 1.69%) and Sterlite Ind (down 1.38%) were the top losers on the index.

Earlier, markets in Asia were down as French and German leaders planned to ask Greece whether it wants to remain in the euro-zone or not. French president Nicholas Sarokzy added that the Greek government would not get the fresh bailout package if it lost the referendum, slated to take place in December.

The Hang Seng tumbled 2.49%; the Jakarta Composite declined 1.52%; the KLSE Composite fell by 0.58%; the Nikkei 225 tanked 2.21%; the Straits Times slipped 0.87%; the Seoul Composite lost 1.48% and the Taiwan Weighted settled 1.82% lower. Bucking the trend, the Shanghai Composite gained 0.16%.

Back home, institutional investors—both foreign and domestic—were net sellers in the equities segment on Wednesday. While foreign institutional investors pulled out funds totalling Rs7.78 crore, domestic institutional investors offloaded stocks worth Rs7.79 crore.

Kerala-based private sector lender Dhanlaxmi Bank is looking to secure an infusion of fresh capital within the next two-three months. Managing director and CEO Amitabh Chaturvedi said the capital infusion would be finalised within the next 2-3 months, though he declined to give any figure on the amount that would be pumped into the bank. The sock soared 10.75% to close at Rs71.10 on the NSE.

Kingfisher Airlines has signed a comprehensive frequent flier agreement with American Airlines. As a result of this agreement, King Club members would be able to earn King Miles even when they fly on American Airlines flights anywhere in the world. Similarly, frequent flyers of American Airlines would be able to earn Advantage points when they fly on any Kingfisher Airlines flight. The stock declined 2.31% to close at Rs2330 on the NSE.

L&T Oman, a subsidiary of the engineering and construction giant Larsen & Toubro, today has bagged two orders worth Rs875 crore from the Muscat Municipality and the Ministry of Transport and Communication of the Sultanate of Oman. The orders are for constructing two road projects—Wadikabir-Darsait road and Mahlah-Ghubbrat al Tam-Ismaiyah road, the company said in a statement. L&T shed 0.35% to end at Rs1,385.15 on the NSE.

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