A major gift from SEBI to the mutual fund industry! Registration will now be easier with just a single form..
The Securities and Exchange Board of India (SEBI) has simplified the process of launching a mutual fund by introducing a single, combined application form for registration. This move eliminates the existing multi-stage process that required separate applications for 'in-principle approval' and final registration. The new application form consolidates all essential information regarding the sponsor, ownership structure, financial strength, governance standards, compliance systems, and the proposed Asset Management Company (AMC), thereby making the approval process more streamlined and transparent.
This reform is expected to reduce paperwork, eliminate duplication, enhance regulatory efficiency, and expedite approvals for new entrants. By simplifying registration while maintaining rigorous compliance and investor protection standards, SEBI has taken a significant step towards improving the 'ease of doing business' in the mutual fund industry and encouraging greater participation in the sector.
**Beware of Live Trading Advisors**
Meanwhile, SEBI has also issued a strong warning to investors. The market regulator cautioned investors against making investment decisions based on live trading strategies presented on social media platforms. The regulator noted that unregistered investment advisory services might be offered during such sessions. SEBI stated that it has come to its attention that certain individuals are providing real-time stock market investment recommendations through live trading sessions on social media. In a statement, SEBI mentioned that these individuals portray themselves as securities market experts and provide detailed analyses on when to enter or exit trades, which strategies to follow, and what positions to take regarding market indices. The regulator added that some of these individuals claim to trade in real-time and showcase their trading performance, market trends based on live data, and projected targets.
What are SEBI's guidelines?
SEBI noted that such live trading sessions attract large audiences and often feature live chat facilities, where services from allegedly unregistered investment advisors are being exchanged. In a circular issued in May, the regulator stated that market price data used for investor education and awareness activities could only be shared with a 30-day lag, and no monetary incentives should be offered to participants. SEBI further stated that individuals engaged solely in educational activities should not use market price data from the preceding 30 days, nor should they forecast future prices or offer advice or recommendations regarding any security or securities.
SEBI's advice to investors
SEBI clarified that real-time market data cannot be shared by any entity, except for purposes related to the orderly functioning of the securities market or to meet regulatory requirements. In this context, SEBI has advised investors to exercise caution and not rely on claims made by individuals offering trading strategies via live or real-time sessions on social media. The regulator stated that investors should not trust suggestions from such individuals or base investment decisions on these live trading sessions; instead, they should deal only with SEBI-registered intermediaries. SEBI urged investors to remain vigilant when transacting in the securities market and to avoid relying on unregistered individuals or entities for investment advice.
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