Plans

IPO form made slim, iBankers to show peer comparison

THE Securities and Exchange Board of India (Sebi) on Thursday announced a slew of measures aimed at bringing back investors into the market by proposing to set up a `know your client (KYC)' registration agency (KRA) to undertake KYC for all investors in the securities market, providing incentives to mutual fund distributors and announcing rules to regulate big distributors.
Sebi chairman UK Sinha said the regulator was working on new rules for alternative asset classes. Although he did not elaborate. Alternative investments include wealth management firms, family offices and art works.

Sebi decided to reduce the IPO prospectus by onefourth, eliminating unnecessary details, while making it less cumbersome for investors. Also, investment bankers have been asked to mention in abridged prospectus materially relevant information such as peer comparison of important financial ratios and risk factors.

Sinha said the board has passed a proposal to set up a mechanism where one or more Sebi-regulated KRA will undertake KYC at the stage of account opening for all clients through Sebi-regulated points of service.

“The change in methodology of KYC process does not compromise on rules for KYC, rather the proposed change will strengthen the uniformity of the conduct of KYC process,“ Sebi said. “The unique identification document or Aadhaar number will be included in the eligible documents as part of the KYC process,“ Sebi added.

The regulator has decided to incentivise distributors who sell mutual fund sche-mes to investors. “The distributor would be allowed to charge Rs 100 as transaction charge per subscription. No charge can be made for investments below Rs 10,000. An additional Rs 50 can be charged from first-time mutual fund investor,“ Sinha said.

However, there would be no transaction charge on transactions other than purchases/subscriptions for new inflows, and direct transactions with the mutual fund, the regulator said.

For SIPs, the transaction charges can be recovered in three or four installments.

Om Ahuaja, head-private wealth mangement, Emkay Global, said, “They are trying to see how to revive mutual fund industry. But larger macro-situation need to be understood much better, the steps taken today would only partly address distributors and manufacturers.“

As a first step towards regulating distributors of mutual funds, selected distributors will be regulated through asset management companies (AMCs) by putting in place the due diligence process.

The Sebi board also approved a framework for setting up of infrastructure debt funds (IDFs).

MF distributors can charge Rs 100 as transaction cost per investment of Rs 10,000 and above Additional Rs 50 can be charged from first-time investors, according to new Sebi guidelines For SIPs, the charge can be paid over three or four installments There would be no charge on transactions other than purchases/subscriptions One common account statement every month to investors for portfolios across mutual funds