SEBI Order: No new scheme of mutual fund will be launched for the next three months i.e. till June 2022.
SEBI Order: No new scheme of mutual fund will be launched for the next three months i.e. till June 2022. Market regulator SEBI has banned this. SEBI has put a stop to this regarding the current treatment with investors’ money. What happens now is that brokers and other intermediaries first pool the money of investors in their accounts and then send it to clearing corporations or asset management companies.
SEBI had ordered the industry in October 2021 last year that this practice should be stopped and money should go directly from investors’ accounts to mutual funds. The mutual fund industry has sought time to comply with this directive and its deadline has already been extended twice and once again till June.
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This time a condition with the deadline increase
SEBI had already extended the deadline for following its instructions twice and has extended it once again but this time a limit has also been fixed. In order to ensure that the industry, intermediaries, clearing corporations and payment gateways are focussed on compliance with the SEBI directives and comply with it without delay, fund houses have been barred from launching new fund offers (NFOs). A Balasubramanian, chairman of Association of Mutual Funds of India (AMFI) and CEO of Aditya Birla Sun Life AMC, said that SEBI wants to completely change the existing system of pooling money. According to Balasubramanian, right now the maximum part of the investment is coming from the existing schemes, so there will not be much problem in following the instructions of SEBI.
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The role of stock brokers and clearing members will be limited
In October last year, SEBI had issued a circular. In this, the intermediaries involved in mutual fund transactions were asked to devise a mechanism so that the money from the account of the investors could be sent directly to the Clearing Corporation and when the investors want to remit the money, it should reach the account of the investors itself. This means that the stockbrokers/clearing members will not be able to handle the pay-in-pay-out as per the SEBI directives. For compliance with this SEBI directive, banks, stock exchanges, payment gateways and clearing corporations need to work on a war footing with Asset Management Companies (AMCs) as there will be changes in technology platforms, payment gateways and transaction platforms. Now there is a ban on issuing new funds, the industry will focus all its energy on this.
(Article: Malini Bhupta)
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