Mutual Funds Related SEBI Regulations.
Date: Mar 31, 2022 Circular
No.: SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/41
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Discontinuation of usage of pool accounts for transactions in the units of Mutual Funds, Two Factor Authentication (‘2FA’) for redemption and other related requirements: Extension of timeline
- Based on discussions with stakeholders and recommendations of the Mutual Fund Advisory Committee, SEBI, vide circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635 dated October 4, 2021 and circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 4, 2021 discontinued intermediate pooling of funds and/or units in Mutual Fund transactions by stock brokers / clearing members on Stock Exchange platforms and by other entities including online platforms, respectively. The provisions of the said Circulars were to come into effect from April 01, 2022. Subsequently, for smooth implementation of the aforesaid circulars, SEBI, vide circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 dated March 15, 2022, inter-alia, clarified various modalities of discontinuation of pooling and migration of existing mandates(the aforementioned circulars are collectively referred to as “Circulars”). Various other requirements related to the modalities of discontinuation of pooling, measures to prevent third-party payments and to safeguard the interest of unit holders including 2FA for redemption,were also prescribed in the “Circulars”.
- SEBI is now in receipt of a representation from AMFI, sent in consultation with various stakeholders,seeking additional time for completion of various activities towards implementation of the “Circulars”. The activity-wise extended timelines sought by various stakeholders have been provided by AMFI (Annexure A).
- 3.On examination of the representation of AMFI, in the interest of the investors, it has been decided to extend the date of applicability of “Circulars”including the clauses relating to 2FA for redemption and source account verification to July 01, 2022.
- Also, Clause 2.1.4 of the SEBI circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 dated March 15, 2022 stands modified as under:“On or after July 01, 2022, new mandates shall be accepted only in favour of SEBI recognized Clearing Corporations and those mandates shall exclusively be for subscriptions to units of Mutual Fund schemes and not for any other purpose.”
- The AMCs, recognised Stock Exchanges, Depositories, recognised Clearing Corporations and Registrar to an Issue and Share Transfer Agents shall take necessary steps for implementing the “Circulars”(along with the clauses relating to 2FA for redemption and source account verification) including the required processes and systems to ensure compliance with the provisions of the“Circulars”.Stock Exchanges/Clearing Corporations and AMCs are also advised to ensurestrict adherence to the activity wise timelines given at Annexure –A.
- Stock Exchanges and Depositories are directed to bring the provisions of this circular to the notice of their members / participants, disseminate the same on their website sand ensure strict adherence to the timelines.
- All other requirements of the Circulars dated October 4, 2021 and March 15, 2022 shall remain unchanged.
- This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interest of investors in securities and to promote the development of, and to regulate,the securities market.
Timelines given by AMFI in consultation with various stake holders to implement is continuation of pooling of funds and/or units in mutual fund sand Two Factor Authentication
Change in payment flow for mutual fund investments on Coin
As per SEBI regulations, starting July 1st 2022, funds in your trading account can no longer be used for mutual fund investments on Coin. Payments for mutual fund investments must be made to The Indian Clearing Corporation (ICCL) from the primary bank account linked to your Zerodha account. Funds from redemptions will be credited to your primary bank account.
How will the new payments flow work on Coin?
On the date of your SIPs, you will see a list of all pending transactions on Coin. You will receive a reminder in your email and on the Coin app. You can make the payment through UPI, netbanking, NEFT and RTGS. We are working on enabling eMandates for automated payments soon.
Changes on Coin
- All the features such as step-up SIPs and instant modification of SIPs will, and order frequencies will continue to be available.
- The payment cut-off time for equity, debt and hybrid schemes is 2 PM and for liquid schemes, it is 12.30 PM. Units will be allotted based on the date the exchanges receive the funds.
- SIP orders will be active for 5 calendar days, in case you forget to make the payment.