Brokers obtain registration as mutual fund distributors so that along with the services of equity trading, they can also provide the services to invest in mutual funds to their clients so that the clients can get all the financial market investment opportunities under one roof.
Association of Mutual Fund Industry in India (Amfi), under the category of corporate, has two fee structures, one for Private Limited Company and the other for Public Limited Company.
For Public Limited Company, registration charge stands at Rs 4 lakh and Rs 2 lakh for renewal. For a Private Limited Company, the registration fee is Rs 20,000, and the renewal charge stands at Rs 10,000.
“For many of the brokers who are Public Limited Companies, the fee structure of Rs. 4 Lakh for registration and Rs 2 lakh for renewal is very exorbitant as it is 20 times more than what is charged for Private Limited Company.
“In order to obtain the benefit in the fees, many of the stockbrokers, who are limited companies are obtaining registration in another entity to carry out the distribution business because of which another entity is unnecessarily being created and brokers are also required to carry-out of the compliance activities for that entity,” Anmi said in a statement.
The stockbrokers association said it had requested Amfi several times to create a category for stockbrokers and charge registration and renewal fees as applicable for a Private Limited Company and the distribution services for a broker whether it is a private limited or public limited is the same.
In response to its communication, Amfi replied that the Amfi fee classification and ARN fee structure is based on the legal status of the entities and all entities under a particular category are charged the fees uniformly, irrespective of their size.
In response, the brokers association also communicated to them that apart from these legal entities, Amfi has recognised other categories such as banks, NBFC, banks, societies, trusts, HUFs and these entities also enjoy the reduced fee benefit.
Anmi, on the behalf of its 900 stockbrokers, had also informed Sebi of the same and had requested to intervene in the matter and the association is still awaiting a favourable reply for them in the matter.
It stressed that the stockbrokers are very important players in the capital market and play a very important role in the development and distribution of mutual funds.