Sebi trashes Mutual Funds hope for commission disclosure in percentage terms

Markets regulator Sebi on Tuesday came out with the indicative format in its circular on the disclosures of distributors’ commission. Even board of the Association of Mutual Funds in India (Amfi) had discussed the issue of commission disclosures to distributors in consolidated account statement (CAS) from October 1, 2016.

In March, the Securities and Exchange Board of India (Sebi) had issued the circular stating that, fund houses should disclose actual commissions paid to the distributors in absolute terms during the half-year period. “The term ‘commission’ here refers to all direct monetary payments and other payments made in the form of gifts/rewards, trips, event sponsorship’s etc. by AMCs/MFs to distributors,”said Sebi circular.

Apart from commissions paid to the distributors, regulator had also announced to disclose the scheme’s average Total Expense Ratio (in percentage terms) for the half-year period, of both direct plan and regular plan, for each scheme where the concerned investor has invested in. CVR Rajendran, CEO-Amfi said, “Sebi has issued a circular on format and we will follow it from October 1, 2016. There was some concerns on commission disclosures, but now we believe that, it will get absorb over the period of time.”

Earlier mutual fund players were hoping that, regulator might allow them to disclose commission in percentage and not in absolute terms as now asked by the regulator.

Securities and Exchange Board of India ( SEBI )