Stock exchanges to facilitate mutual fund distribution: SEBI

The Securities and Exchange Board of India (SEBI) has allowed mutual fund distributors to leverage the stock exchange platform so as to improve their reach and expand fund distribution channels.

Accordingly, mutual fund distributors have been allowed to use the infrastructure of recognised stock exchanges to purchases and redeem mutual fund units directly from mutual funds / assets management companies on behalf of their clients.

This would be in addition to the existing channels of mutual funds distribution, SEBI said in a circular issued on Friday.

The facility would be available to mutual fund distributors registered with the Association of Mutual Funds in India (AMFI) and who have been permitted by the concerned recognised stock exchange for purchases and redemption of  mutual fund units directly from MFs / AMCs, subject to payment of required fee and compliance with the code of conduct etc as laid down by it.

However, the MF distributors will not be handling payout and pay in of funds as well as units on behalf of investor.

This will be done by the respective stock exchange, which will put in place the necessary system to ensure that pay in will be directly received by recognised clearing corporation and payout will be directly made to investor account.

In the same manner, units will also be credited and debited directly from the demat account of investors.

The respective recognised stock exchanges, recognised clearing corporations and depositories will provide detailed operating guidelines for MF distributor to facilitate this.