New Delhi: SEBI on Friday constituted two working groups to review the role and eligibility of sponsors of mutual funds to facilitate growth and innovation in the industry and to streamline the role and obligations of trustees of such financial instruments.
A working group to review the role and qualifications of the sponsor of MFs will be headed by Aditya Birla Sun Life AMC MD and CEO and A Balasubramaniam, president of industry body AMFI, while another group will be formed to streamline the role and responsibilities of the trustees. had gone. The MF will be headed by Manoj Vaish, an independent trustee of Mirae Mutual Fund.
“Keeping in view the changing dynamics of the Mutual Fund industry, a need has been felt that in addition to the existing eligibility requirements for sponsoring a Mutual Fund, an alternative set of eligibility requirements may be introduced to enable the new players. who may not otherwise be eligible, to act as sponsor,” SEBI said in a statement.
This is expected to not only boost competition in the mutual fund industry, but also facilitate consolidation in the industry through mergers and acquisitions so as to regain economies of scale and scope. In addition, it is expected to facilitate new inflows of capital into the industry and promote innovation.
Besides Balasubramaniam, the other members of the group are – J Ranganayakulu, former executive director, advisor to SEBI and Cyril Amarchand Mangaldas; Nilesh Vikamsey, Khimji Kunwarji & Co LLP Chartered Accountants; DP Singh, Chief Business Officer, SBI Funds Management Limited; and Alok Mundra, Partner, EY India.
The Working Group will recommend an alternative set of eligibility criteria for entities to act as sponsors; Review the current eligibility requirements to be a sponsor; Recommend mechanisms to address conflicts of interest that may arise when pooled investment vehicles/private equity act as sponsors.
Further, it will examine the requirement of the sponsor to reduce its stake in the asset management company (AMC), the existing requirement of holding at least 40 per cent of the net worth and the alternatives that may be adopted by the sponsors in this regard. There are ways. ,
SEBI said that with a view to streamline the responsibilities at the level of trustees and AMCs, it has been decided to review the role and obligations cast on the trustees of MFs to ensure that the trustees are subject to fiduciary obligations and the supervisory authority cast on them. focus on the role. Instead of being burdened with operational responsibilities.
In addition, a need has also been felt to provide financial independence and suitable mechanisms to the trustees to perform their roles more effectively and fairly.
SEBI has constituted a five-member working group to examine these aspects.
Apart from Vaish, the other members of the group are Sunil Gulati, Independent Trustee, SBI Mutual Fund; Ramamurthy Rajagopal, Chief Operating Officer, DSP Mutual Fund; Supriya Sapre, Chief Compliance Officer, HDFC Mutual Fund and Padmaja Shirke, Compliance Officer, Union Mutual Fund.
The Terms of Reference of the Working Group are to examine the obligations imposed on the trustees by various provisions of the MF Rules of SEBI to determine whether certain obligations of an operational nature can be assigned to the AMC.
The Working Group will also identify the responsibilities for which trustees can avail the services of professional assurance agencies; and to make available the necessary financial resources to the trustees to discharge their obligations independently.