Sebi code for MF intermediaries

In a bid to bring more transparency in selling mutual fund schemes,the Securities and Exchange Board of India has come out with a code of conduct for intermediaries of mutual funds. The 16-point code of conduct issued by Sebi stated that intermediaries should not rebate commission back to investors and avoid attracting clients through temptation of rebate or gifts.

Another major point in the code of conduct was to avoid encouraging over transacting and churning of mutual fund investment to earn higher commissions. If any intermediary does not comply with the code of conduct,the mutual fund should report it to Amfi and Sebi. It also says that no mutual fund should deal with those intermediaries ho do not follow code of conduct.

Now the intermediaries will have to highlight risk factors of each scheme,avoid misrepresentation and exaggeration and urge investors to go through schemes information document and key information memorandum before investing in a mutual fund schemes. Some of the market players sense that,this code of conduct will not have much impact on the fund house.

Dhirendra Kumar,CEO of Valueresearch online said,This is more of a law,earlier there was only a code of conduct from Association of Mutual Fund in India. So from now onwards all the intermediaries selling mutual fund schemes will have to comply will the code of conduct.