Mutual funds upset over SEBI’s idea of forced listing of units on stock exchanges
Moneylife Digital Team 25 August 2010

The move will escalate compliance burden on AMCs who see no value addition to investors

Market regulator Securities and Exchange Board of India's (SEBI) intention to mandatorily list all mutual fund schemes has received widespread flak from the industry. According to industry players speaking to Moneylife on the condition of anonymity, listing fund units on the stock exchanges will not provide any value addition to investors but will only burden them with additional compliance requirements. They complain that they are already inundated with excessive compliance work after the sweeping changes brought in by the regulator over the past one year.

Partly due to such frequent and extensive changes, equity mutual fund schemes have witnessed Rs11,560 crore of redemption since the regulator abolished entry loads in August 2009. Since November 2009, the industry has lost a whopping 8.33 lakh equity folios till July 2010.

In a move to counteract the sudden fall in mutual fund inflows, the regulator allowed trading of fund units on the stock exchanges. National Stock Exchange (NSE) started its online trading platform for MFs on 30 November 2009 and the Bombay Stock Exchange (BSE) launched its BSE StAR MF platform on 4 December 2009. However, the volumes have been meagre so far. In July 2010, the NSE recorded 2,340 transactions with Rs20.65 crore of net inflows.
Last week, the regulator asked fund houses to facilitate smoother transfer of mutual fund units between two demat accounts. This too is going to increase the cost for fund houses without any material benefit to investors. Moneylife had earlier reported on how the regulator was seeking bank-sponsored mutual funds' help to boost trading volumes on the exchanges which received a tepid response from bankers. (Read here: and here (
Now in another forced measure, the regulator has asked all fund companies to compulsorily list their units on the exchanges. "The regulator has sought feedback from us. We will be replying in a few days. The cost of listing mutual fund units is less compared to stocks. All our equity schemes are already listed. We are sorting out the operational issues. The compliance department will have a tough time ahead," said an official who did not wish to be named.  

In order to list units on the NSE, mutual funds with a corpus up to Rs100 crore have to cough up Rs16,000 initially; if the tenure of the scheme is more than six months, the listing fee as applicable for multiples of six months will be levied. Similarly, the initial listing fee for a scheme whose corpus exceeds Rs1,000 crore is Rs1.25 lakh.

Unlike MFs, companies have to shell out Rs25,000 as initial listing fees and have to incur an additional annual listing fee depending on the paid-up share capital of the company. As the share capital goes up further, the fee also goes up. Currently 20 fund houses have listed their schemes on the NSE while the Bombay Stock Exchange (BSE) has 23 AMCs on board.

1 decade ago
It seems that Mutual Fund Industry is on its path to collapse. Daily a news arrives with changes to be made. Every day by day MF aum is falling. Let the watch dog decide that they want Mutual Fund industy to remain or not. On on hand watch dog say Mutual fund should not made expenses and other hand watch dog come out with purposel which cost a lot. At last these cost is with Investor money
1 decade ago
It is said that ""KUTTA JAB PAGAL HO JATA HAI TO USE GOLI MAR DETE HAI",now it seems the regulator has gone fully mad,the only remedy is GOLI-the ailing MF industry should come porward to protest in all ways (even violently if needed)to curb this man and remove him from his HITLER post-this is the only remedy left-all AMC's should come forward along with distributors to GHERAO SEBI chief office-if AMC's dont want to die a infant death-they should incur the expenses of all this agitation-thats the only UPAY left now to stop this Tughlakism
1 decade ago
SEBI Chairman has interfered with everything that was good for MFs and now has almost become maniacal about bringing in more changes before demitting office in February 2011...we can only hope that the next encumbent takes a rational relook at all that Mr Bhave had done
partiksh goyal
1 decade ago
i firmly believe that SEBI chief has gone berserk and govt. should appoint someone with sound mind.
R Balakrishnan
1 decade ago
Obviously, the regulator is pimping for the Stock Exchanges, that are selling shares to one and all. If there are no mutual funds, who is left to trade?
Maybe it is time that SEBI is disbanded. Or maybe AMFI could try 'compounding' and pay the distributors.
Replied to R Balakrishnan comment 1 decade ago
The only UPAY(remedy) left is either fight to all this madness or die-AMC's should come forward unitedly to ask the regulator to stop or quit the post-if they deny-MF industry should not obey SEBI orders and should formulate their own code of conduct and regulatory body-then only this FATWAISM will stop and save MF industry-All AMC's should call IFA's to Mumbai with all facilities to make protests against SEBI office-this should be done openly by AMC's to wake up SEBI
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