Markets regulator Sebi has directed execution-only platforms (EOPs) offering direct mutual fund plans to get registered in order to offer such services.
“While investors may find it convenient to avail services of such online platforms, those who are not clients of such intermediaries under the regulations may not have recourse or protection for the risks associated with the transactions,” said the circular.
These have been labelled Category 1 and 2 EOPs. Both Amfi and the exchanges have been directed to ensure compliance and define their policies for registering the EOPs and onboarding investors.
EOPs will have to ensure compliance with the operational framework, KYC norms, and investor protection norms as laid down by Amfi or the exchanges.
Category 1 EOPs may charge transaction fees that will be borne by the AMCs, as per the limits set by the AMC. Onboarding fees shall also be borne by the AMC. The AMC will not be able to pass on fees paid to EOPs to charges of MF schemes.
Transaction fees charged by Category 2 EOPs will be borne by the investor, based on limits set by the exchanges, while onboarding fees will be borne by the AMC and/or investor. The circular will take effect from September 1, 2023.