SEBI for uniform KYC norms for regulated entities

The Securities and Exchange Board of India has decided to have uniform know your customer (KYC) norms for all SEBI regulated entities.

“I found out that different market intermediaries regulated by SEBI have different KYC requirements, only after I joined SEBI,” said the SEBI Chairman, Mr U.K. Sinha, at the CII mutual fund summit in Mumbai on Wednesday.

With this an investor has to satisfy the KYC requirement only once for all capital market transactions and that would be applicable across all intermediaries providing economy of effort.

He asked the fund houses to disclose the components of their business based on their origin whether they belong to institutional or retail investors.

He also advised them to reveal the track record of fund managers, a step that could increase inflows into schemes handled by performers and also increase the need to retain performing fund managers.

The stock market regulator also has plans to regulate the mutual fund distributors. “We are seriously looking into it. We plan to start out with a limited number of large distributors,” Mr Sinha said.

“The attempt is regulate them in a non-disruptive manner and will be disclosure based.” This would make distributors accountable and promote good selling practices.

The SEBI Chairman said that all the three mandates of the regulator — protect the interests of investors in securities and to promote the development of, and to regulate the securities market are important and SEBI would work towards all three and ensure that they do not contradict each other.

He also added that SEBI’s first mandate would always be towards protecting the investor.

The SEBI Chairman said that mutual funds should seriously look at having a presence in the pension segment especially the one that subscribers choose voluntarily. He has asked for a plan from the industry on the same.

In addition, he has also advocated better geographical penetration using the financial advisor route and promised all help in developing a system for professional financial advisors.

Incentives are required to pull in new investors and incentivisation of distributors should help in achieving better penetration, he added.

Mr Sinha signed off by asking the MF industry to offer simple products to the last mile investor, someone who has never invested in the capital market.

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