Market watchdog Sebi has given in- principle approval to Institute of Mutual Fund Intermediaries, promoted by industry body AMFI, to set up a self regulatory organisation (SRO) for distributors working for various fund houses in the country.
Apart from IMFI, Organisation of Financial Distributors (OFD) and Financial Planning Standards Board India (FPSB) had also applied for the SRO role in the mutual fund distribution space.
According to sources, Securities and Exchange Board of India (Sebi) has given in-principle approval to IMFI.
Its parent body, Association of Mutual Funds in India, is a grouping of all fund houses in India and is entrusted with the responsibility of distributor registrations.
Official at AMFI could not be contacted for their comments.
The SRO will assist Sebi and AMFI in regulating fund distributors and ensuring a cordial relationship with mutual fund houses.
The decision to set up an SRO followed concerns about MF distributors not being regulated and rising complaints against them for mis-selling products.
Among other applicants, OFD was set up by Financial Intermediaries Association of India (FIAI), a grouping of 15 large distributors, while FPSB is a financial planners' industry body.
The proposal to set up an SRO to regulate the mutual fund distribution business was mooted in August last year, while a detailed framework in this regard was approved by the Sebi board in June. The deadline for submitting applications for SRO was July 31.
At present, distributors need to register with AMFI, which can cancel the registration for violation of a prescribed code of conduct or for any other mala fide practice.
