In a move to protect the interest of mutual fund investors, Sebi on Monday announced banning ‘intermediate pooling’ of funds and units by mutual fund distributors, investment advisers, channel partners, platforms and other entities.
The new rule, to come into force from April 1, 2022, will not be applicable for Sebi-registered portfolio managers.
Besides, asset management companies (AMCs) will have to put in place necessary systems to ensure that transactions of funds and units about subscription as well as redemption are directly done between the accounts of the investors and the mutual fund scheme accounts concerned. There will not be any intermediate pooling, Sebi said.
Coming out with a detailed circular on Monday, the regulator also said that AMCs will be liable to compensate for losses to a unitholder due to unauthorised transactions resulting from fraud, negligence, or deficiency on the part of the AMCs.
Sebi said it has been observed that based on a bilateral understanding with AMCs, a few platforms pool the clients' funds into a nodal account and subsequently transfer to AMCs either on per transaction basis or lump sum basis.
“AMCs shall ensure that intermediate pooling of funds and/or units in any manner by MFDs, IAs, MFU, channel partners, or any other service providers/ platforms, by whatsoever name called, are discontinued for MF transactions," the circular said.
MFDs are Mutual Fund Distributors, IAs are Investment Advisers and MFU is Mutual Fund Utilities.
The latest decision has been taken after discussions with stakeholders and recommendations of Sebi's Mutual Fund Advisory Committee.
(With inputs from PTI)