SAT admits appeal against giving IMFI SRO status

The Securities Appellate Tribunal (SAT) has admitted an appeal against a decision on approval given for setting up a regulatory organization for distributors. SAT is a tribunal that hears appeals against decisions of the Securities and Exchange Board of India (Sebi).

The appeal will now be heard on the 1st of July.

Sebi had given its approval to the Institution for Mutual Fund Intermediaries (IMFI) to act as a self-regulatory organization(SRO) for mutual fund distributors on February 6. IMFI is promoted by MF industry body-the Association of Mutual Funds in India (AMFI).

An SRO is essentially an organisation of intermediaries which plays a regulatory role.

Another one of the applicants for the role, the Financial Planning Supervisory Foundation had moved SAT against the same citing a conflict of interest.

FPSF has argued in its appeal that there is a conflict of interest in allowing an organization promoted by the mutual fund industry to regulate distributors of their own products. It had also argued that IMFI had filed the SRO application on July 29, while it was only incorporated on August 2.Sebi's deadline for filing the SRO application was July 31.

IMFI, FPSF and Organization of Financial Distributors (OFD) had submitted applications to Sebi to form an SRO.