On 18th September, SEBI chairman Ajay Tyagi announced after the conclusion of its board meeting.SEBI approves new KYC norm for FPI, allows foreign investments, new settlement management.
The regulator will soon release a revised circular on KYC requirement and eligibility norms for foreign portfolio(FPIs) issued separately. SEBI give investors some reasons to get relief.SEBI said all mutual fund commissions and expenses must be paid from scheme itself, not from associate asset management companies, sponsors or trustees. Industry must adopt a full trail model of commission in all schemes without paying any upfront commission. Trail’ means a steady, small percentage that the distributor gets as long as the money stays invested.
Stefan Groening, director, investment solutions, at Sharekhan, BNP Paribas, said as costs go down, the net return of funds increases, making mutual funds even more attractive. “Care should be taken to ensure that costs are not lowered to an extent where the industry is unable to attract and pay for quality talent,” he said. “Additionally, moving to the all-trail model helps better align the distributors’ interest with the investors, thereby benefiting the retail investor. However, it may become difficult for new distributors to enter the market”.
“The board took note of the benefits of the (Sebi mutual fund advisory committee) proposal with respect to sharing of economies of scale, lowering the cost for investors, bringing in transparency in the appropriation of expenses, and reducing mis-spelling and churning,” the Sebi statement added.
Under the Initial Public Offering(IPO) process, use of UPI has been approved as a payment mechanism for a faster listing of shares in IPO. Sebi also reduced the time period for listing after an initial public offering to three days from six, freeing up locked investor funds faster.
Large corporate shall rise 25% of their total borrowing through the bond market. The cutting down on the total expense ratio of mutual funds will save investors money between a range of RS.1300-1500 crores.
Sebi allowed interoperability of clearing corporations, helping market participants strong their clearing and settlement functions at a single clearinghouse and reducing the effective trading cost for investors. Interoperability will lead to efficient allocation of capital for the market participants, SEBI said.
As a first step for opening up the commodity derivatives markets to foreign participants, the board approved the regulatory framework for permitting foreign entities having actual exposure to Indian commodity markets to participate in the domestic commodity derivatives markets.
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