Industry feels impact lost in current market but steps are in the right direction for the longer term.
These were aimed at bringing transparency for investors, or as the chairman said after a board meeting during the year, "These measures were taken to make the life of the average retail investor simpler and easier." These ranged from common monthly mutual fund account statements to easier procedures for opening trading accounts.
Here's a summary on some of the significant changes.
Uniform KYC norms: Deven Choksey, managing director of K R Choksey Securities, terms it the most retail-friendly move of the year. Investors do not have to go through the cumbersome process of filing various know-your-client (KYC) documents and making multiple signatures each time they invest in a fund or approach a new broker. The account opening form has been reduced to one page from the earlier 50 pages.
A mechanism for centralising the KYC records in the securities market is being developed. Once the KYC norms have been complied with at any Sebi-registered participant, the data will be shared across intermediaries. No fresh KYC will be required. The data collected will be managed by a KYC registration agency.
Brokers anticipate this single KYC window could intensify competition within the broking fraternity. Investors, if dissatisfied with their broker, may not think twice before shifting to another, owing to the tedious KYC process being done away with. Broking charges may be cut to retain clients.
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IPO form simplified: Deeming the existing initial public offer (IPO) forms non-investor friendly, the market watchdog has vowed to change their format, as well as bring down the number of pages by over half. Plus, to enable informed decisions by investors, the form will carry information regarding peer companies' price-earnings (PE) ratio and track record of lead managers of the IPO. Data regarding the stand-alone as well as the consolidated results of at least three of the preceding five years will also need to be included in the offer document.
Transaction costs on MFs: After the much-touted removal of entry loads in 2009, a semblance of it has crept back into the system in the form of transaction costs. Annual investments in excess of Rs 10,000 will now attract a transaction charge of Rs 100 a year. This will be in addition to the existing commissions charged by the distributor, albeit from the fund house. For a systematic investment plan, the charge can be paid in three to four instalments in a year. First-time investors must pay higher, Rs 150, to open a new account.
However, these charges are applicable only if you go through a distributor or an agent, not for direct investments made through the fund house.
Quicker redressal: Sebi introduced an online route for investors' complaint redressal. Those wishing to file complaints against listed entities with the regulator may now do so through the mechanism, titled 'SCORES'. The system is a centralised database of all complaints. Most important, it allows investors to view the current status of the complaint. This wasn't possible with physical complaints, a major drawback for the complainant.
Alternative investments: Sebi enlarged its governance space by including venture capital funds, hedge funds and private equity funds under its ambit. These funds must now register with Sebi and comply with disclosure norms as stipulated by the watchdog.
To protect retail participants from falling prey to risky investment avenues that not many understand well enough, Sebi raised the ceiling for minimum investment, mainly for portfolio management services, from the existing Rs 5 lakh to Rs 25 lakh. And, pegged it for other alternative investment funds, like art funds and collective investment schemes, at Rs 10 lakh.
Industry players feel though these steps are positive, the impact was lost in the current market. Only once the equity markets turn and investor confidence returns would the actual benefits of these changes be seen.