New Delhi: Securities and Exchange Board of India (SEBI) on Monday decided to ban the usage of pool accounts for mutual fund transactions. Market regulator SEBI, in its notification, stated that pooling of funds by stock brokers, MF distributors and investment advisers will be discontinued from April 1 next year.
SEBI said the step has been taken “to protect the interest of investors in securities.”
The regulator told asset management companies (AMCs) to ensure that funds pay-in should be directly received by the clearing corporation from the investor account and funds pay-out should be directly made to the investor account. “Pay-in/pay-out of funds shall not be handled by the stock brokers or clearing members.”
It added that the same direction must be followed for demat and non-demat transactions.
“The onus of compliance with PMLA (Prevention of Money Laundering Act) provisions and not permitting transactions with third party bank account continues to lie with the AMCs. AMCs may avail the services of SEBI recognized clearing corporations to validate the investors’ source bank account information. In such cases, clearing corporation shall make the necessary source account details available to AMCs,” the SEBI notification read.
Sebi further stated that stock brokers or clearing members facilitating MF transactions should not accept mandates for SIPs (Systematic Investment Plans) or lump sum transactions in their name.
It clarified that stock brokers or clearing members shouldn’t accept payment through one-time mandate or issuance of mandates/instruments in their name for MF transactions.
However, one-time mandates in favour of SEBI recognized clearing corporations may be accepted, the market regulator mentioned.
Though, Sebi highlighted that cheque payments from investors issued in favour of the respective SEBI recognized clearing corporations or MF scheme(s) can be accepted.
It also said that stock exchanges and AMFI (Association of Mutual Funds in India), in consultation with SEBI, should issue operating guidelines to stock brokers or clearing members and AMCs to facilitate the MF transactions on stock exchange platforms.
The regulator had permitted units of MF schemes to be transacted through registered stock brokers and clearing members by using exchange infrastructure via its two circulars in 2009 and 2010.
It had also allowed allowed MF distributors and investment advisers to use the infrastructure of the stock exchanges to purchase and redeem mutual fund units on behalf of their clients.