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| SEBI extends pooling of accounts deadline to July 1, 2022 | | |  The Securities and Exchange Board of India (SEBI) has extended the deadline for discontinuing pooling of accounts by three months to July 1, 2022. The earlier deadline to stop the exercise was April 1, 2022.
Stoppage of pooling of accounts will ensure that funds used for purchasing a mutual fund by an investor will directly go to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) clearing corporation's account, and not to the stock broker's account.
Similarly, mutual fund units too are supposed to be directly credited to the investor's account (in cases where this is not happening currently) once the SEBI-initiated move comes into effect.
The extension of deadline will help facilitate efficient technology overhaul and its smooth transition to serve growing investor needs, a statement by Association of Mutual Funds in India (AMFI) said.
The association said that it had requested SEBI to extend the deadline to allow greater time for the transition and help investors with the change in the system.
When an investor places a "buy" order for mutual fund units through a stock broker, money from his or her account is credited to the broker's pool account. From there, the money goes to the account of NSE Clearing or BSE Clearing Corporation, to be credited to the mutual fund asset management company's (AMC) account.
After the pooling system comes to an end, the funds will move directly from the investor's account to the NSE Clearing or BSE Clearing Corporation and not to the stock broker's account.
From April 1, 2022 onwards, stock brokers, mutual fund distributors, investment advisors and other service providers involved in mutual fund transactions for their clients were supposed to stop pooling of funds. This was to be done in compliance with SEBI's October 2021 order, which had barred such pooling.
The intent behind the SEBI move was to ensure the safety of investor money and prevent its possible misuse by intermediaries involved in such transactions.
The AMFI statement said that after mutual discussion and agreement, SEBI gave the mutual funds industry time till July 1 to stop pooling of accounts. This, it said, would enable the industry to bring in high level of operational efficiency in the interest of investors and also allow efficient functioning of mutual fund subscriptions and redemption.
Reacting to the development, A Balasubramanian, Chairman of AMFI said, "We are confident of faster implementation owing to adoption of new-age technology and with the help of other stake holders such as stock exchanges and channel partners, so that we can further strengthen investor service and their evolving savings need towards newer mutual fund solutions." |
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