Sebi to meet mutual fund trustees on August 29

REGULATORS GET CRACKING

The capital markets regulator, Securities and Exchange Board of India (Sebi), will meet trustees of asset management companies on August 29 to understand their governance structure and their views, Sebi Executive Director R K Nair said.

“The role of the trustees has been explained in the regulations but we want to know the effectiveness (of the regulations) and the perception of the trustees about it,” Nair said.

Sebi Chairman C B Bhave had earlier said the advisory committee would study if regulations governing the mutual fund sector require changes. The regulator has already written to trustees of all asset management companies about this, Nair said.

Nair was in Kolkata to attend a mutual funds seminar organised by the Indian Chamber of Commerce on Saturday. The meeting with the trustees is part of an initiative by Sebi’s mutual fund advisory committee set up recently under the chairmanship of S A Dave.

Trustees are required to oversee the functioning of asset management companies, nature of their investments, and also standard of service to investors. “We haven’t yet finalised the agenda of the (mutual fund) advisory committee but this is something we are doing now that is talking to the trustees,” Nair said.

BS Reporter adds:

Sebi has urged the mutual fund industry to adopt a standardised disclosure format, which should include the amount of commission they pay to distributors, value of assets and where they have invested.

Nair called for more transparency in fixed income, derivative and structured products. “With new products coming in, there is a need for proper risk dissemination mechanism. We are working with the mutual fund industry to include disclosures,” he said.

While mentioning that the Indian capital markets need not necessarily imitate western markets in the backdrop of the recent sub-prime crisis, Nair said, “Sebi is doing a balancing act to ensure a steady market in bad times.”