AMCs may be charged by direct mutual fund entities up to Rs. 2 each transaction: AMFI

The Association of Mutual Funds in India (AMFI) has released guidelines for online platforms registering under the Category-I (Cat-I) of execution only platform (EOP) framework. These guidelines state that platforms selling direct plans of mutual funds (MFs) may now charge asset management companies (AMCs) up to Rs 2 for each transaction.

“In consultation with and guidance from the Securities and Exchange Board of India (SEBI), the upper limit for transaction fees for Cat-I EOPs has been capped at Rs 2 per transaction,” the association said in the guideline.

AMCs have the option to pay back the platform’s payment gateway costs in addition to the transaction fee. In order to promote competition, AMCs may also decide to award new EOP participants with an extra 50 paise every transaction.

Platforms marketing direct money market schemes have two alternatives available to them: register with AMFI (under EOP Cat-I) or with exchanges (under EOP Cat-II), according to separate regulations released by SEBI in June.

Platforms may decide to charge investors under EOP-II. Stockbrokers do not need to register for the EOP if they exclusively provide MF investment services to their broking clients.

The platforms in question now have much-needed clarity regarding transaction fees in advance of the deadline of November 30th to select between the two options.

The larger firms, many of whom have been running their platforms under a stockbroking licence, might not be persuaded to register with AMFI by the transaction fees, though.

According to a top executive, Groww, the biggest direct mutual fund investment platform and stockbroker, will keep its current setup and has no immediate intentions to start charging clients.

FYERS, a company that provides MFs in addition to stockbroking, intends to keep running its MF platform under the stockbroking license.