SEBI issues regulations for execution-only platforms for direct mutual fund schemes
#SEBIissuesregulationsfor #executiononlyplatformsfor #directmutualfundschemes
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SEBI issues regulations for execution-only platforms for direct mutual fund schemes
An EOP is a digital or online platform which facilitates transactions such as subscription, redemption and switch transactions in direct plans of schemes of mutual funds.
The Securities & Exchange Board of India (SEBI) has made it compulsory for execution-only platforms (EOPs) to get registered with the regulators and barred them from offering regular plans of mutual funds schemes as part of the new regulatory framework introduced for such platforms for direct mutual fund investing.
An EOP is a digital or online platform which facilitates transactions such as subscription, redemption and switch transactions in direct plans of schemes of mutual funds.
Up till now, there was no specific framework available for technology/digital platforms (including platforms provided by Investment Advisers/Stock Brokers to non-clients) to provide execution-only services in direct plans of mutual fund schemes.
As per the SEBI circular dated June 13, no entity would be allowed to operate as an EOP without obtaining registration from SEBI or the Association of Mutual Funds in India (AMFI), as the case may be.
Categories of EOP
The capital markets regulator has divided EOPs into two categories. The Category 1 EOPs would need to be registered with AMFI, the mutual fund industry body.
Under this category, the EOPs would act as an agent of asset management companies (AMCs) and integrate their systems with AMCs and/or Registrar and Transfer Agents (RTAs) authorized by AMCs to facilitate transactions in mutual funds.
These entities may act as an aggregator of the transactions in direct plans of schemes of mutual funds and provide services to investors or other intermediaries.
The Category 2 EOPs would need to be registered as a stock broker with SEBI and can operate as an agent of investors and operate only through the platforms provided by the stock exchanges
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