Financial Daily from THE HINDU group of publications
Wednesday, Apr 07, 2004
Financial Daily from THE HINDU group of publications Wednesday, Apr 07, 2004 |
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Markets
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Mutual Funds Phased approach mooted for AMFI to become a self-regulated body Veena Venugopal
Mumbai , April 6 THE mutual fund industry is considering making the Association of Mutual Funds in India (AMFI) a self-regulated organisation (SRO) in a phased manner. According to Mr S.K. Mitra, Director, Financial Service, Aditya Birla Group and the Chairman of the AMFI committee on SRO, the Securities and Exchange Board of India's requirement for AMFI to be an SRO is urgent but its members have many considerations and are in dialogue with the SEBI officials to have a phased approach to being an SRO. In its current form, AMFI is merely an association that recommends proposed regulations and these are formalised by SEBI after consultation with fund houses and AMFI. Once it becomes an SRO, the body would be allowed to evolve its own regulations for the industry. The SEBI directive on SRO states that the board of SRO would have nine directors, five of who would be nominated by SEBI and four would be chosen by the members. "This makes it a junior SEBI, not a more powerful AMFI," said the Chief Executive Officer of a fund house. There are also concerns within the industry that the four member-directors could collude to form policies that are favourable to their own fund houses, at the cost of others. "In an industry where there is such a large variation in sizes, there cannot be a one size fits all approach. So the policies have to be made taking into account everybody's concerns. Even in the past there has been a bull dozing approach at AMFI meetings, this would only get worse if regulatory powers are granted to AMFI," said an AMFI member. "The SEBI norms on SROs that have been published are very different from what was being expected. This involves moving AMFI into a very different form from what it is today. It would require an entirely different kind of monetary, financial and human resources set-up," said Mr Mitra. Industry insiders reveal that SEBI's regulation took AMFI and members by surprise. While the subject was discussed on and off earlier, it was not taken seriously as an initiative.
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