Regressive regulation

New compensation rule for AMCs is illogical

In a recent circular, the Securities and Exchange Board of India (Sebi) decreed fund managers and other senior employees of asset management companies (AMCs) should be paid a minimum of 20 per cent of their gross compensation in the form of units held in schemes where they play a role, or have oversight. These units should have a lock-in period of three years. This comes into effect from June 1. The circular said this was to “align the interest of the key employees of the AMCs with the unit holders of the mutual fund schemes”, which is a bureaucratic way