Mutual fund AMCs can get exchange membership in debt segment

As per the SEBI notification, AMCs managing mutual funds would take membership of debt segment of stock exchanges under the 'proprietary trading member' category

Market regulator Securities and Exchange Board of India (SEBI) has allowed asset management companies (AMCs) appointed by mutual fund houses to take membership of stock exchanges.


The notification from SEBI issued on 19th August, would enable mutual funds to directly trade on the debt platforms of the bourses. AMCs can register themselves under ‘proprietary trading members’ category on the stock exchanges.


Subject to certain conditions, the custodian in which the sponsor of a mutual fund or its associates hold 50% or more of the voting rights, would be allowed to act as custodian 'for a mutual fund constituted by the same sponsor or any of its associates or subsidiary', SEBI said.


These include the sponsor having a net worth of at least Rs20,000 crore at all points of time, and 50% or more of the directors of the custodian having to be those who do not represent the interests of the sponsor or its associates.


Generally, custodians are referred to entities that are responsible for safe keeping of securities and they also offer other services.


Other conditions include the custodian and the AMC of a mutual fund not being subsidiaries of each other and no person is a director of both the custodian and the AMC of a mutual fund.


Earlier in June, the SEBI Board had approved AMCs managing schemes of mutual funds to take membership of debt segment of stock exchanges under 'proprietary trading member' (PTM) category. However, SEBI said, this (the membership) will be only to undertake trades directly on behalf of such schemes managed by the AMCs.


The Board also decided to allow mutual fund distributors to take limited purpose membership of stock exchange with lesser financial and compliance burden to use infrastructure of the exchanges for distribution and redemption of mutual fund units.


Govt & RBI causing greater collateral damage to the economy

According to Nomura, the import curbs announced by the Indian government are a mere quick-fix approach. The reality is that the current account deficit-CAD is high for various fundamental reasons but nothing much is being done to address this

Continuing on its drive to restrict imports to improve the current account deficit, the Indian government announced that airline passengers would no longer be able to import duty-free flat-screen televisions from 26th August. This announcement, along with other import curbs announced last week, is aimed at lowering India's non-essential imports at a time when the country is facing balance of payments pressures.


"The reality is that the current account deficit (CAD) is high for various fundamental reasons, but nothing much is being done to address that. The risk is that policymakers will need more pressure from a weaker currency to come out with stronger policy responses. In this toing and froing between the government and the Reserve Bank of India (RBI), we see greater collateral damage to the economy due to rising bank asset quality concerns, greater stress on corporate balance sheets because of higher leveraging and increased margin pressures, and therefore, much slower economic growth," said Nomura Financial Advisory and Securities.


As per the announcement, passengers will have to pay a 35% customs duty along with other charges. Electronic goods imports have been growing in recent years, led mainly by higher mobile and TV sets. According to news reports, government officials estimate more than one million TV sets were brought into the country last year under a scheme that allowed airline passengers to bring in screens worth up to Rs35,000 as part of their baggage allowances.


Nomura feels that these are unlikely to create a big ripple, but it is an important signal that the government continues to adopt a quick-fix approach to current problems.


"The underlying assumption is that the funding gap is a temporary problem, which can be tided over through such artificial trade barriers. Not surprisingly, Indian rupee continued to depreciate against the US dollar. We do not see any quick fixes for the economy anymore," Nomura said.


Accordingly, Nomura said, it remains negative on India's economic outlook over the next six to nine months.




4 years ago

The government should relegate political approach and take stringent economic action. The approach should be both short term and long term. Efforts should be to increase the exports, to cut down demand for imports and take long term investments in areas where today's imports appear cannot be curtailed.

Axis Asian Opportunities Fund: Another global fund

Many foreign funds of the have been launched as a marketing gimmick and do not offer investors much diversification. Is the new scheme from Axis Mutual Fund any different?

Axis Mutual Fund recently filed an offer document with the regulator to launch an open ended fund of funds scheme investing in a foreign fund. This scheme would invest 95%-100% of its assets predominantly in units of Schroder International Selection Fund Asian Opportunities or other similar overseas mutual fund schemes. The remaining portion would be invested in debt & money market instruments which may include units of money market/liquid schemes of Indian mutual funds. Schroder International Selection Fund Asian Opportunities launched in October 1993 is one of the funds under the Schroder International Selection Fund. Schroder’s is a global investment company that manages around 580 funds globally with a total corpus of $388 billion.

Moneylife has analysed in the past on how global funds that put your money in other countries don’t necessarily offer much diversification. (Read: Global Funds: Lacklustre performance) Other similar schemes include: ICICI Prudential Indo Asia Equity Fund, JPMorgan Asean Equity Offshore Fund, Mirae Asset India-China Consumption Fund and Franklin Asian Equity Fund. The performance of these four schemes is as follows:

The underlying scheme—Schroder International Selection Fund Asian Opportunities— has a track record of nearly 20 years, aims to provide capital growth primarily through investment in equity securities of Asian (ex Japan) companies. At least two-thirds of the fund (excluding cash) will be invested in shares of companies in Asia, excluding Japan. The fund has no bias to any particular industry or size of company. The fund believes that Asia offers superior economic growth potential, with China and India providing key support.

As on 31st July 2013, out of its corpus of $1.64 billion, the fund has invested nearly 39% of its assets in companies listed in China, and, around 11% each in companies based in South Korea and Taiwan. Around 7% of its portfolio is invested in companies from India. Out of its total of 61 holdings, the top five holding include Taiwan Semiconductor Manufacturing, Samsung Electronics, Jardine Matheson Holdings, Hyundai Motor and AIA Group. Over the one-year, three-year, five-year and ten-year period ended 31st July, the scheme has beaten its benchmark.

Sudhanshu Asthana, who has an experience of over 10 years, would be the fund manager of the scheme. The performance of the scheme would be benchmarked to MSCI AC Asia ex Japan Net TR index.


Other details of the scheme

Minimum amount for purchase/Switch in

Rs. 5,000 and in multiples of Re 1/- thereafter

Minimum Additional Purchase Amount

Rs.100 and in multiples of Re. 1/- thereafter


Exit Load:

3% if redeemed / switched - out up to 6 months from the date of allotment

2% if redeemed / switched - out after 6 months & up to 12 months from the date of allotment

1% if redeemed / switched - out after 12 months & up to 24 months from the date of allotment


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