SIF distribution set for a boost as Sebi eases certification norms

NISM has introduced a combined certification examination for mutual fund and Specialised Investment Fund distributors, simplifying the qualification process

Specialised investment funds (SIFs) are set to get a distribution boost as the Securities and Exchange Board of India (Sebi) has eased certification norms for distributors, removing a key hurdle that led to slow distributor enrollment.

 

The National Institute of Securities Markets (NISM), Sebi's training and certification institute, has introduced the NISM-Series V-D: Mutual Fund Distributors Certification Examination. It is a unified certification for both mutual fund (MF) and SIF distribution.

 

Until now, distributors had to clear two separate examinations — Series V-A for MFs and Series XIII for SIFs. The latter, according to MF officials, was difficult to crack because of its derivatives-heavy syllabus.

 

The combined exam is expected to be comparatively easier as MF-related questions will have a 45 per cent weight.

 

Equity and interest rate derivatives will have 35 per cent and 20 per cent weight, respectively, show a release by NISM.

 

“This is a significant step towards expanding SIF distribution. It achieves two objectives: Improving efficiency by combining the two certification requirements into a single examination, and reducing the level of difficulty by removing currency derivatives from the syllabus. In addition, the new examination gives greater weight to the NISM Series V-A mutual fund curriculum than the Series XIII," said Deepak Jain, president and head — sales, Edelweiss Mutual Fund.

 

According to Venkat Chalasani, chief executive of the Association of Mutual Funds in India (Amfi), the new examination will enable distributors to “offer informed and comprehensive wealth solutions.”

 

“By bringing MFs and SIFs under a single certification framework, the new curriculum provides distributors with a more holistic understanding of the investment landscape while simplifying the certification process. It will enable them to serve investors with greater confidence and professionalism across the entire spectrum of investment products,” he said.

 

The SIF distributor, while having grown steadily in the last one year, is still a small fraction of the active MF distributor count. As of June-end, there were 8,371 SIF distributors s against an MF distribution base of 340,000. Several fund houses have delayed their entry into the SIF space owing to lack of distribution strength.

 

The easier certification route, however, comes at the cost, says Suranjana Borthakur, head of distribution & strategic alliances, Mirae Asset MF.

 

“The simplification is a welcome step and on the face of it a single consolidated exam is operationally simpler than requiring MF distributors to clear two separate certifications. Merging the two exams may not be entirely a good idea, as it risks diluting the purpose of understanding derivatives, a genuinely nuanced subject, with the depth it deserves,” she said.

 

“SIFs use long-short and derivative overlay strategies that are meaningfully different from plain-vanilla MFs. And, distributors will need to actually understand those payoffs to sell them responsibly, not just clear a compliance hurdle. We’ll have a clearer view once the syllabus and question pattern are out and the first cohort has attempted it,” she added.