SEBI has asked AMFI’s suggestions on having compulsory demat account for Mutual Fund investors. AMFI will be providing its suggestions on June 15.
SEBI is of the view that demat accounts be made mandatory but AMFI is suggesting to keep it optional.
For your reference:
http://www.financialexpress.com/news/Sebi-wants-mandatory-demat-accounts-for-mutual-fund-investors/632791/
I have few queries in this regard.
1. After the abolition of entry loads many IFAs have already stopped selling MFs. Does compulsory opening of demat accounts spell doom for IFAs, since majority of the business will shift to brokerage houses?
2. If majority of people who hold physical mutual funds shift to demat form, then does this defeats the very purpose of long-term investment of MFs? Will MF investors become traders just like stock brokers?
3. SEBI has allowed brokerage houses to charge on every buy and sell of MF units on the stock exchange but there is hardly any commission left for IFAs. Moreover, stock brokers hardly have any knowledge of MFs. Isn’t this a double standard by the market regulator?
4 Having a demat account also requires giving a power of attorney to the brokerage house. Will this leave investor at the mercy of stock brokers?
5 Will this move help in penetration of Mutual Funds in tier two and tier three cities?
6 Does it serves investor interest?
As I understand that some of these are regulatory issues, I can ensure anonymity of your views on some of the answers. Please respond your views before 11 am on Monday as the same is to be taken up by IFA Galaxy with AMFI / SEBI and Media
Regards,
Ramesh Bhat
IFA Galaxy
