Market regulator SEBI is believed to be contemplating stricter rules for mutual fund houses as some of them are resorting to restrictive trade practice by creating irritants for investors wanting to shift to a new distributor. Some MF houses are asking investors to obtain a from previous distributors if they want to shift to a new one. While getting an NOC from the previous distributor for shifting to a new one has long been declared a 'restrictive trade practice' some of them are still asking for such NOCs,a senior fund manager with a leading Asset Management Company (AMC) said. MF industry body AMFI had also advised all the fund houses to discontinue the practice,he added. As the Securities and Exchange Board of India's earlier guidance to AMFI and fund houses has not yielded desired results,the market regulator is now looking at stricter norms for compliance on part of fund houses,sources said. Earlier in August,SEBI had directed Association of Mutual Funds in India (AMFI) to ensure MF investors wanting to switch distributors are not asked to get an NOC from existing distributor. "Despite the circular,most AMCs insist on going back to previous distributor for getting NOC. But it is a restrictive trade practice as no fund house would be willing let investors shift investments," another industry player said. Around 2 years ago,AMFI had written to AMCs,asking them to withdraw the NOC clause. The clause had originally been introduced in 2002 when guidelines for distributor change during investment tenure were being framed.
