Hindu Business Line: Mumbai: Thursday, 01 May 2014.
Market
regulator SEBI is likely to go by the Securities Appellate Tribunal ruling on
its in-principle nod to the Institution for Mutual Fund Intermediaries (IMFI)
for becoming a self-regulatory organisation for mutual fund distributors.
The issue
relates to SEBI designating IMFI as an SRO (self regulatory organisation) for
mutual fund distributors. IMFI is floated by AMFI (Association for Mutual Funds
in India).
SEBI had
called for applications for an SRO for mutual fund distributors on or before
July 31, 2013.
IMFI,
Organisation of Financial Distributors (OFD) and Financial Planning Supervisory
Foundation (FPSF) promoted by the Financial Planning Standards Board India
(FPSB) were three applicants and SEBI awarded the SRO status to IMFI.
FPSF
contested the regulator’s decision stating that the date of incorporation of
IMFI according to the records of the Ministry of Corporate Affairs was August
2, 2013, while the deadline for application submission to SEBI for becoming an
SRO was July 29, 2013.
FPSF also
moved the Securities Appellate Tribunal on the issue.
RTI
applicant’s move:
Meanwhile, an
RTI applicant, Shashank Prabhakar, approached the Finance Ministry stating that
the regulator had not provided adequate response to his queries on the issue.
FPSF had also appealed to the Finance Ministry contesting SEBI’s decision.
The Ministry
on March 4, 19 and 28 sought comments and status report on the issue of
approval from the market regulator.
Finance
Secretary Arvind Mayaram in his March 28 letter to SEBI pointing to the issues
raised by FPSF to the Ministry, asked the market regulator to respond to them.
File notings
and comments on the internal correspondence of the Finance Ministry (copies
available with Business Line) state that the plain reading of the provisions of
SEBI’s SRO regulations indicate that AMFI was not an eligible entity as on the
relevant date (July 31, 2013).
Further,
Ministy communications state that IMFI, OFD and FPSF were the three applicants.
And except for FPSF, the date of registration of other two entities was on
August 2, 2013 (for IMFI) and August 30, 2013 (for OFD) respectively, which is
after July 31 SEBI’s deadline for submission of applications.
Responds
to BL query
SEBI in
response to Business Line queries said: “It is stated that vide letter dated
April 10, SEBI had already replied to the Ministry of Finance on the said
matter. Further, one of the applicant (i.e. FPSF has filed an appeal before
appellate tribunate. SEBI proposes to file its reply before SAT. The matter is
sub-judice.
In August,
2012 the SEBI board proposed the concept of SROs to regulate distributors with
seed capital from SEBI and AMFI.
Tribunal’s
final hearing on the issue is scheduled on July 1.
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