Sebi scraps transaction charges for mutual fund distributors, effective immediately; AMCs to follow revised payout norms

Markets regulator Sebi has scrapped the provision allowing asset management companies (AMCs) to pay transaction charges to mutual fund distributors for investments above a certain threshold, with the change taking effect immediately, PTI reported.The move follows a public consultation in May 2023 and an industry consultation in June this year.Under the earlier framework, distributors were eligible for transaction charges if they secured a minimum subscription of Rs 10,000. “Sebi Master Circular for Mutual Funds dated June 27, 2024, allows AMCs to pay to the distributor transaction charges, subject to a minimum subscription amount of Rs 10,000 brought in by such distributors,” the regulator said in a circular on Friday.However, based on feedback, Sebi noted that distributors — as agents of AMCs — should be compensated directly through prescribed commission structures, making separate transaction charges redundant. The relevant provisions in the master circular have now been deleted.The regulator said the change will streamline distributor remuneration while enhancing transparency in the mutual fund ecosystem.