no-transaction-charges-for-mutual-fund-distributors-says-sebi

Markets regulator Securities and Exchange Board of India (SEBI) said it has scrapped transaction charges paid to mutual fund distributors in order to simplify the distributor compensation process while maintaining transparency in the mutual fund ecosystem. 

The decision came after a public consultation carried out in May, 2023, and an industry consultation done in June this year, said the regulator.

In a ‘master circular for mutual funds’ dated June 27, 2024, the regulator allowed AMCs to pay to the distributor transaction charges, if they brought in a minimum subscription of ₹10,000, the regulator informed on Friday.

 

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However, based on the feedback, SEBI said it decided to “do away with” the rule after observing that distributors, as agents of AMCs, are entitled to be remunerated by the AMCs.

Accordingly, the master circular – which governed these charges – has been deleted. This will come into force with immediate effect, the regulator said.