TMI BlogDiscontinuation of usage of pool accounts for transactions in the units of Mutual Funds: Clarifications with respect to Circulars dated October 4, 2021X X X X Extracts X X X X X X X X Extracts X X X X ..... al Funds: Clarifications with respect to Circulars dated October 4, 2021 1. SEBI, vide circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 4, 2021 , discontinued intermediate pooling of funds and/or units in Mutual Fund transactions by Mutual Fund Distributors ( MFDs ), Investment Advisers ( IAs ), Mutual Fund Utilities ( MFU ), Channel Partners or any other service providers/ platforms, by whatsoever name called. Similarly, SEBI, vide circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635 dated October 4, 2021 , discontinued the pooling of funds and/ or units by stock brokers / clearing members in any manner for Mutual Fund transactions on Stock Exchange platforms, permitted vide SEBI circulars dated November 13, 2009 and da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the monies collected from the bank account of the investor only into an Approved Account; and b. PA shall not act on instructions of the stock brokers / clearing members to alter or modify the list of Approved Accounts and in no case the monies shall be credited to the bank account of the stock brokers / clearing members. (ii) With respect to processing mutual fund transactions under the above mentioned mandates, Stock Exchanges/ Clearing Corporations shall: a. ensure that PA has put in place adequate checks and balances, inter alia, to ensure such Approved Account is that of a Clearing Corporation; b. enter into an agreement with the concerned PA to ensure that only those mutual fund transactions are processed through them whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions shall not accept payment through one-time mandate or issuance of mandates/ instruments in the name of the OTM holders for mutual fund transactions. 2.2.2. In this regard, it is clarified that: (i) Existing mandates being used for Mutual Fund transactions can continue to remain in the name of such OTM holders, subject to AMCs ensuring that the PA puts in place mechanisms wherein beneficiary of the mandate can only be an Approved Account (which shall only be the bank account of a mutual fund pool account or mutual fund scheme account) such that: a. PA shall directly credit the monies collected from the bank account of the investor only into an Approved Account, with the credit being made as per the mandate/ instruction give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and not for any other purpose. 2.3. For the purpose of this Circular, the term: (i) mandate includes instrument, authorisation or order in any form, including electronic means, to effect a payment by a person for the purpose of mutual fund investment; and (ii) Payment Aggregators includes Payment Aggregators authorized / permitted by RBI and scheduled commercial banks acting in the capacity of Payment Aggregators. 2.4. Clause 4.4 of the SEBI Circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 4, 2021 stands modified as under: 4.4. In case of redemption of units, Two-Factor Authentication (for online transactions) and signature method (for offline transactions) shall be used for authentication. One of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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