SEBI introduces new regulation for mutual funds
The Securities and Exchange Board of India (SEBI) has recently announced a new regulation for mutual funds, which has started discussions in the market. However, Nikhil Kamath, co-founder of brokerage firm Zerodha, says that commenting on it now would be a bit hasty for him. According to Nikhil, the new regulatory framework for SEBI’s Execution Only Platforms (EOPs) is a step that has been taken in the direction of the interests of investors and market participants.
What is SEBI’s new rule?
On Tuesday, June 13, SEBI issued a new regulation for mutual fund schemes’ subscription, redemption, and switch transactions on the Direct Plan as an Execution Only Platform (EOP). As per the new rules, now SEBI or the top body of mutual funds, AMFI, will not be able to work without EOPs’ approval. They will be able to provide transaction facilities in mutual fund’s Direct Plan only after proper registration. The deadline for this has been fixed on September 1. Execution-only trading services allow only trades and do not provide advice to clients on the risks or benefits of investment.
What does Nikhil Kamath of Zerodha say about this?
Nikhil Kamath says that his team is still trying to understand the new guidelines, and they cannot say anything about it yet. According to him, efforts are being made to find a way to implement it. It should be noted that Zerodha also offers Direct Plan. The direct plan is an investment option that allows investors to invest in mutual funds without intermediaries such as distributors or brokers.
SEBI in Action: Unregistered advisory services banned, and over Rs. 12 crore earnings impounded
In related news, SEBI has taken action against those who provide unauthorized stock tips. The regulator has impounded the complete earnings of such brokers, and they are now on the radar of SEBI.
In conclusion, SEBI’s new regulation for mutual funds is a step towards the interests of investors and market participants. However, it is important to note that the implementation process is still underway, and more information will be available in due course.
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