SEBI to soon launch a web for direct MF sales

The Dollar Business Bureau

Securities and Exchange Board of India (SEBI) is interested on a platform, where investors can purchase mutual funds directly without any brokers. Concurring to it, the market regulator is planning to bring an online model for trading the financial instruments soon.  

The financial advisors have been lobbying against the compulsory disclosure of the commissions given by the mutual fund houses. These fund houses also need to disclose to the investors the information on salaries and other payments.

According to SEBI Chairman U K Sinha, the SEBI is more concerned about the investors, rather than the mutual fund distributors. The mutual fund is shifting towards direct purchasing in most of the countries. The Independent Financial Advisors (IFAs) do not form even 10% of mutual fund businesses’ Assets Under Management (AUM).

He said that the mutual funds industry has seen encouraging developments in the  past few years. The AUM has increased over 50% at Rs.14 lakh crore, in last three years. The number of folios have surged up to Rs.4.8 crore. The mutual funds net equity inflows have increased at such a time, when the Foreign portfolio investors (FPIs) exposure towards Indian markets have decreased to some extent.

In Sinha’s words, more than 90% of the mutual fund schemes have surpassed their benchmark indices many times. Currently, the SEBI has improved the disclosure norms for better transparency, and the market regulator is seriously trying to cap the expense ratio in certain mutual fund schemes.

He also stated that there is no need to relook at the commission disclosure guidelines. In India, there are more people purchasing various things on ecommerce portals rather than those buying mutual funds. He was of the opinion that if people can buy other products online, it is possible to purchase mutual funds too. The new structure that offers mutual funds online will be made available soon, and that can happen after the Nandan Nilekani committee meeting, on May 30th. 

This procedure for buying mutual funds online will be Aadhar-linked. To encourage direct buying of mutual funds, the SEBI is looking to bring completely new web platforms, as the current platforms are not appropriate for transactions, he added.