Three companies are in the race to obtain the regulator’s approval to become the mutual fund distributors' self regulatory organisation (SRO).
The capital market regulator, Sebi, will grant approval to only one of the three companies applying - which are the Institute of Mutual Fund Intermediaries (IMFI), Organisation of Financial Distributors (OFD) and FPSB India.
IMFI has been set up by the AMFI – Association of Mutual Funds in India. OFD is a company promoted by the Financial Intermediaries Association of India (FIAI) and FPSB is a financial planners’ industry body.
Sebi, in its August 2012 Board meet, had taken the decision to set up a separate regulatory body for mutual fund distributors. This space is as of today largely unregulated even though various industry bodies exist like AMFI, FIFA and FIAI among others. The last date for sending in the applications was fixed as July 31, 2013.
Industry officials said that the process for the selection by the regulator was in full swing, and various participants and their applications are being examined.
“Right now, the regulator is verifying the documents submitted and is seeking further clarifications and queries. The queries requested are largely operational and pertain to the structure and objectives of the companies which have applied,” said an official related to the matter.
At present, it is AMFI which provides registrations and certifications in conjunction with NISM to mutual fund distributors. The AMFI Registration Number (ARN) provided is the licence to sell mutual fund products.
Post the SRO being set up, this responsibility would be given to the newly set up entity.
“As of now, it looks like the new entity would be in charge of the registration process. AMFI may not be involved once the SRO is set up,” said a senior industry official, who is also on the board of one of the companies that has applied.
For their part, AMFI officials have already stressed that if IMFI is given SRO approval, it would be an entity regulated by Sebi and would not come under the ambit of AMFI.
It is as yet unclear when Sebi’s decision is likely to be out.
