Stock brokers, especially those that are public listed firms, are seeking a reduction in charges that they have to pay to the Association of Mutual Funds in India (AMFI) for acting as mutual fund distributors.
The umbrella body of stock brokers has written to the Securities and Exchange Board of India (SEBI) after their discussions with the mutual fund industry body proved futile.
The Association of National Exchanges of Members of India (ANMI), which boasts of around 900 stock brokers as its members, has highlighted the fact that broking firms that are in the form of publicly listed companies as well have to pay Rs 4 lakh as registration fee and thereafter Rs 2 lakh as renewal fee every three years.
This is much higher than that for private limited firms that pay a registration fee of Rs 20,000 and renewal fees of Rs 10,000 once every three years.
This assumes significance as any entity that wants to sell mutual funds is required to obtain registration from AMFI by paying the registration fees and also the renewal charges once every three years.
“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,” said a statement from ANMI.
“… in order to obtain the benefit in the fees, many of the stock brokers, 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,” it added.
The latest move by ANMI comes after repeated requests to the mutual fund industry body seeking lower registration fees by creating a separate category for ‘stock brokers’ and levying charges that are currently applicable to a private limited company.
Incidentally, AMFI already has in place different categories, including banks, NBFCs, societies, partnership firms, proprietorship firm, individuals, micro finance institutions, trusts and HUFs among others.
“When anomalies are pointed out either our member should be explained the reasons for levying such a high Registration and Renewal Fees or otherwise the anomaly should be rectified,” stated the ANMI letter to SEBI.