Description
SEBI eliminates transaction charges paid to mutual fund distributors, removing minimum subscription requirements with immediate effect.
Summary
SEBI has eliminated transaction charges paid to mutual fund distributors by deleting paragraphs 10.4.1.b and 10.5 from the Master Circular for Mutual Funds. This change removes the previous requirement of minimum subscription amount of INR 10,000 for distributors to receive transaction charges.
Key Points
- Transaction charges to mutual fund distributors are completely removed
- Previous minimum subscription requirement of INR 10,000 is eliminated
- Paragraphs 10.4.1.b and 10.5 of SEBI Master Circular for Mutual Funds are deleted
- Change based on public consultation in May 2023 and industry consultation in June 2025
- Distributors as agents of AMCs remain entitled to remuneration from AMCs
Regulatory Changes
- Complete removal of transaction charges framework for mutual fund distributors
- Deletion of specific regulatory provisions (paragraphs 10.4.1.b and 10.5) from Master Circular
- Streamlining of distributor compensation structure
Compliance Requirements
- All Mutual Funds must comply immediately
- All Asset Management Companies (AMCs) must adjust compensation structures
- All Trustee Companies must ensure compliance
- AMFI and RTAs must implement changes in their systems
Important Dates
- Effective Date: Immediate effect from August 08, 2025
- Consultation Period: May 2023 (public) and June 2025 (industry)
Impact Assessment
This change simplifies the mutual fund distribution landscape by removing transaction charge complexities while maintaining distributor compensation through other means. It may lead to more streamlined operations for AMCs and clearer compensation structures for distributors.
Impact Justification
Significant regulatory change affecting mutual fund distribution structure and compensation model