AMFI may bring overseas distributors under its net

Distributors are currently emempted from registration, certification & Know Your Distributor processes

accThe Association of Mutual Funds in India (AMFI) is looking to get entities who distribute Indian mutual funds abroad to register with it. These distributors are currently exempted from registration, certification and the Know Your Distributor(KYD) process.
A committee comprising mutual fund industry officials is looking into the details and guidelines on the same are expected shortly, according to a source.

A letter written to an asset management company, a copy of which is with Business Standard, noted that registration is likely to become the norm soon.

“While AMFI registration is not necessary as per SEBI(Securities and Exchange Board of India) guidelines, the ARN committee has suggested that overseas distributors may be requested to register with AMFI for tracking and industry MIS(Management Information System) purposes. ARN Committee is in the process of finalizing suitable guidelines in this regard,” said the letter.

The ARN Committee refers to the AMFI committee on Registration of AMFI Certified Distributors. The term MIS is used to describe a method of collecting and storing data in a manner that makes it available for easy reference when making management decisions.

An email sent to AMFI officials on the matter did not receive a reply.

An earlier letter from AMFI had recorded a relaxation in guidelines for overseas distributors. Overseas distributors did not need a certification from the National Institute of Securities Markets(NISM) or AMFI registration.

“…overseas distributors are now not required to obtain NISM certification and AMFI Registration and are also not required to comply with KYD(Know Your Distributor) process,” said the earlier letter dated July 13,2012.

This meant that local distributors would only have to adhere to the local regulations in the place where they operate.

 “...the overseas distributors may be required to comply with the extant laws, rules and regulations of jurisdictions where they carry out their operations in the capacity of distributors,” it added.

The exemption had originally been given on account of logistical difficulties involved in registration of overseas distributors.

“They would need to get biometric scans done and overall it was not considered easy to execute,” said one official.

Some mutual fund officials are not too enthused by this proposal.

“The country-wise data is already available because of the addresses of the distributors, and other data would be available to the individual AMCs. I am not sure how much value such a process will add,” said the chief executive officer of a mutual fund.