SEBI imposes Rs150 transaction fee on new MF investments

In order to enable people with small saving potential and to increase reach of mutual fund products in urban areas and smaller towns, SEBI has decided that a transaction charge per subscription of Rs10,000 and above be allowed to be paid to the distributors

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) on Monday said new investors will now have to pay an extra Rs150 for investment of Rs10,000 and above in mutual funds (MFs), while the charge will be Rs100 for existing investors, reports PTI.

“In order to enable people with small saving potential and to increase reach of mutual fund products in urban areas and smaller towns, it has been decided that a transaction charge per subscription of Rs10,000 and above be allowed to be paid to the distributors,” SEBI said in a circular.

Investors are already paying a commission in some cases, besides up to 2.5% of their investment towards expanses of fund management.

Now the distributors would be allowed to charge Rs100 as transaction charge per subscription. No charge can be made for investments below Rs10,000.

“As an incentive to attract new investors, the distributor may be paid Rs150 as transaction charge for a first time investor in mutual fund,” the circular added.

For systematic investment plans (SIPs), the transaction charges can be recovered in three or four instalments, it added.

SEBI further said that the investors would continue to pay upfront commission directly to distributors.

Last month SEBI chairman UK Sinha after the SEBI board meeting had said that transaction fee is some way to compensate the distributors, who may have lost interest in the distribution of MF products.

Experts said this move is seen as back-door imposition of entry load, a fee charged to the investors at the time of their investment in a MF scheme.

MF distributors had been demanding re-introduction of entry load, which was abolished by SEBI in 2009. Then the board was headed by CB Bhave. Distributors have been complaining that their business has taken a hit since then.

SEBI said that in the interest of investors, there is a need to regulate the distributors by putting in place due diligence process to be by asset management companies.

SEBI said the due diligence process may be initially applicable for distributors having presence in more than 20 locations or those who have received over Rs1 crore commission in a year.

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SEBI simplifies trading account opening procedures

While currently, an investor has to enter into a number of agreements depending on his trading preferences, market regulator SEBI said that henceforth new investors need to sign only one trading account opening form and not a multiple set of documents

Mumbai: Simplifying the procedure for investors entering the capital market, the Securities and Exchange Board of India (SEBI) on Monday said they need to sign only one trading account opening form and not a multiple set of documents, reports PTI.

“The client will now be required to sign only on one document i.e. account opening form,” market regulator SEBI said, adding it is being done with a view to simplifying and rationalising the account opening process.

At present, an investor has to enter into a number of agreements depending on his trading preferences, like stock exchanges, segments, internet/wireless technology-based trading, etc. As a result, the investors need to put his sign on a large number of documents.

SEBI said that henceforth, in the trading account opening form, the client would need to put his signatures instead of saying ‘yes’ or ‘tick mark’ while indicating preferences for trading.

As part of simplifying the account opening process, SEBI has devised uniform documentation to be followed by all the stock brokers and trading members.

In the account opening process, stock brokers and trading members would also give a tariff sheet specifying various charges, including brokerage, payable by the client to avoid any disputes at a later date.

Besides, any voluntary clause or document added by the stock brokers shall form part of the non-mandatory documents, SEBI added.

The market regulator has asked the stock brokers to take necessary steps to implement simplified procedure in respect of all new clients within 15 days.

The decision was taken, it said, in consultation with major stock exchanges and market participants.

However, in case the investor wants to avail running account facility, execute power of attorney, he would have to give specific authorisation to the stock broker in order to avoid any dispute in the future.

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Licence to foreign bank only if it gives investment detail: ICAI

Stating that ICAI is working on how banking sector could respond to the grave problem of black money, ICAI president G Ramaswamy said information which is in the interest of nation must be shared by the foreign financial institutions with Indian authorities

Chandigarh: Suggesting strong measures to track black money, The Institute of Chartered Accountants of India (ICAI) on Monday said new foreign banks should be granted licences only if they agree to furnish details on “investment made by Indian people outside India,” reports PTI.

Apart from this, the ICAI also pitched for making it compulsory for revealing the source of funds of foreign donations coming into India to prevent money laundering.

The ICAI has constituted a group to provide necessary inputs on addressing the issue of black money, ‘benami’ transactions and money laundering and is expected to submit recommendations to the Central Board of Direct Taxes (CBDT) by September or October.

“If any foreign bank comes to India we should get a declaration (from it) that any investment made by Indian people outside India, they (bank) have to provide details about it and they have to agree for it if they want a licence (to operate in India),” ICAI president G Ramaswamy told reporters on the sidelines of annual convocation held here.

Stating that ICAI is working on how banking sector could respond to the grave problem of black money, he said information which is in the interest of nation must be shared by the foreign financial institutions with Indian authorities.

The accounting regulator is also of the view that access should be allowed to know about the source of funds of any donation flowing from abroad into India.

“We must have right to collect information about who is giving money (donation) ... how this money is utilised ... if not then why it is not utilised. The main idea is that the foreign donation should not act as a case of money laundering,” he stressed.

Mr Ramaswamy further said, “We are requesting that trusts which receive foreign donations should get registered with the ministry of home affairs and they should file details about their accounts in order to bring transparency in their functioning.”

The ICAI has already submitted a report on ‘Uniform Accounting and Auditing Framework’ for political parties to the Election Commission, having a mandate of bringing about accountability of political parties by amending relevant laws.

Asked about the status of Rs14,000-crore Satyam fraud, the ICAI president said that it had already cross examined 12 witnesses, including banks, CBI and SEBI, in this case.

He informed that one of the auditors had gone to the Supreme Court to stay proceedings but their SLP was rejected.

“Now they have been asked to present before our disciplinary committee after 3rd October,” he said.

The ICAI had constituted a five-member disciplinary committee to carry out proceedings against auditors of Satyam Computer.

Earlier in his speech, Mr Ramaswamy asked chartered accounts to maintain corruption-free system while playing a role of auditors, tax consultants and liquidators.

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