On behalf of 900 stock brokers, Association of National Exchanges of Members of India (ANMI) has inked a letter to Securities Exchange Board of India (SEBI) for reduction in AMFI registration charges as mutual fund distributors for Stock Broking Public Limited Company, according to a press release.
The submission covered the below points:
1. Any entity desirous of selling mutual funds, is required to obtain registration from AMFI by paying registration fees and is also required to renew its registration every three years by paying the renewal fees.
2. AMFI specifies fees for registration and renewal fees for the mutual fund distributors.
The fees are specified based on the legal structure of the MFDs, such as banks (other than specified below), regional rural banks, district central cooperative banks, NBFC, private limited company, public limited company, one person company, LLP, partnership firm, urban co-Op. banks, societies, trusts, HUFs, post office, micro finance institution, proprietorship firm, individuals (Including senior citizens), employees, new cadre of distributors, the press release said.
3. Brokers obtain registration as mutual fund distributors so that along with the services of equity trading, they can also provide the services to invest in Mutual funds to their clients so that the clients can get all the financial market investment opportunities under one roof.
4. Majority of the brokers fall under the corporate category i.e. private limited company and public limited company, as around the year 1994/1995 on the direction of SEBI to corporatize the membership on the xxchanges, many brokers have converted their memberships from individual / partnership concern to private limited and public limited company.
5. AMFI, under the category of corporate has two fee structures, one for private limited company and other for public limited company.
The registration fees for private limited company is Rs 20,000 and the renewal fees (every 3 years) is of Rs 10,000. Meanwhile, the registration fees for a public limited company is Rs 4,00,000 and the renewal fees (every 3 years) is of Rs 2,00,000.
6. The press release said that for many of the brokers who are public limited companies, the fee structure of Rs 4 Lakh for registration and Rs 2 Lakh for renewal is very exorbitant as it is 20 times more than what is charged for private limited company and in order to obtain the benefit in the fees, many of the stock brokers, who are limited companies are obtaining registration in another entity to carry out the distribution business because of which another entity is unnecessarily being created and brokers are also required to carry-out of the compliance activities for that entity.
7. ANMI had requested AMFI number of times to create a category for “Stock Brokers” and charge registration and renewal fees as applicable for a private limited company as the distribution services for a broker whether he is a private limited or public limited is the same and anomaly of collecting 20 times more fees from a public limited company is removed.
8. AMFI replied that the AMFI fee classification and ARN fee structure is based on legal status of the entities (such as public limited company, private limited company, LLP partnership firm, etc.) and all entities under a particular category are charged the fees uniformly, irrespective of their size or net-worth or AUM.
9. In response, ANMI also communicated to them that apart from the above legal entities, AMFI has also recognised other categories such as banks, NBFC; the urban Co-Op. Banks, societies, trusts, HUFs etc and these entities also enjoy the reduced fee benefit.
10. ANMI had also informed SEBI of the same and had requested to intervene in the matter and are still awaiting faourable reply for them in the above matte
ANMI stressed that the “Stock Brokers” are very important players in the capital market and play a very important role in the development and distribution of mutual funds, as per the press release.
Advisory Committee is constituted to look into the anomalies and wherever required to intervene in the interest of the market besides to promote ease of doing business.
When anomalies are pointed out either our member should be explained the reasons for levying such a high registration and renewal fees or otherwise the anomaly should be rectified.
The ANMI has requested the Advisory Committee to look into the submission made and to provide relief to members, according to the press release.
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