Invested hard-earned money in mutual funds? Sebi has taken this big decision - READ CIRCULAR | FULL TEXT

Do you invest in mutual funds? If yes, here is a big development for you from capital markets regulator Sebi. Taking a major decision, Sebi has now allowed investors to directly access the infrastructure of stock exchanges for purchasing and redeeming mutual fund units straight from mutual fund and asset management companies. Sebi in a circular said, "The move is aimed at further increasing the reach of the platform."

Here is FULL TEXT of the CIRCULAR by SEBI:-

"SEBI/HO/MRD1/DSAP/CIR/P/2020/29

February26, 2020

To

All recognised Stock Exchanges,Clearing Corporationsand Depositories (except Stock Exchangesand Clearing Corporations in International Financial ServicesCentre)

Dear Sir/ Madam,

Subject:  Facilitating transaction  in  Mutual  Fund  schemes  through  the Stock Exchange Infrastructure

SEBI   vide   its   Circular no. CIR/MRD/DSA/32/2013   dated   October   04,   2013,   and CIR/MRD/DSA/33/2014 dated December 09, 2014 had permitted mutual fund distributors to use recognised stock exchanges' infrastructure to purchase and redeem mutual fund units directly from Mutual Fund / Asset Management Companies.

2.Subsequently, SEBI vide its Circular no. SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October  19,  2016 allowed SEBI  Registered  Investment  Advisors  (RIAs)  touse infrastructure of the recognised stock exchanges to purchase and redeemmutual fund units  directly  from  Mutual  Fund/Asset  Management  Companies on behalf  of  their clients, including direct plans.

3.In  order  to  further  increase  the  reach  of  this  platform,  it  has  been  decided  to  allow investors  to  directly  access infrastructure  of  the  recognised  stock  exchanges  to purchase   and   redeem mutual   fund   units   directly   from   MutualFund/   Asset Management Companies.

4. The recognised stock exchanges,clearing corporationsand depositoriesmay make necessary  amendment  to  their  existing  byelaws,  rules  and/or  regulations,  wherever required.

5.This  circular  is  issued  in  exercise  of  the powers  conferred  under  Section  11(1)  of the  Securities  and  Exchange  Board  of  India  Act  1992,  read  with  Section  10  of  the Securities  Contracts  (Regulation)  Act,  1956  to  protect  the  interestsof  investors    in  securities  and  to  promote  the  development  of,  and  to  regulate  the securities market.

6.This   circular   is   available   on   SEBI   website   at   www.sebi.gov.in at“Legal Framework→Circulars”.

Yours faithfully,

Sanjay Purao
General Manager
Market Regulation Department
Tel. No: 022-26449343
[email protected]"

Prior to this decision by Sebi, the regulator allowed investment advisors and mutual fund distributors to use stock exchanges for sale and purchase of mutual fund units in October 2016 and October 2013, respectively. And, before that only brokers were allowed to utilise the exchange mechanism for transaction in mutual fund units.