Discontinuation of usage of pool accounts for transactions in the units of Mutual Funds

Last updated: 15 March 2022

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The Securities and Exchange Board of India (SEBI) has issued clarifications regarding the discontinuation of pool accounts for mutual fund transactions. Effective April 1, 2022, intermediate pooling of funds and units by distributors, investment advisers, and other service providers is no longer permitted. This circular provides specific guidance for transactions on stock exchange platforms and those facilitated by other entities, including requirements for payment aggregators and mandate acceptance to safeguard investor interests.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 March 15, 2022 To All Recognized Stock Exchanges and Clearing Corporations All Depositories All Mutual Funds All Asset Management Companies (AMCs) All Trustee Companies/ Boards of Trustees of Mutual Funds All Registrar to an Issue and Share Transfer Agents (RTAs) Association of Mutual Funds in India (AMFI) window.unibots = window.unibots || { cmd: [] }; unibots.cmd.push(()=>{ unibotsPl

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FAQ :

The use of pool accounts for intermediate pooling of funds and/or units in mutual fund transactions by distributors, investment advisers, and other service providers has been discontinued.

The changes are effective from April 1, 2022, with the exception of clause 2.4 regarding redemption authentication, which is applicable from April 15, 2022.

Stock brokers and clearing members can no longer accept payments directly for mutual fund transactions. Existing mandates can continue if Payment Aggregators ensure funds go directly to the Clearing Corporation's account. New mandates after April 1, 2022, must be in favour of SEBI-recognised Clearing Corporations only for subscriptions.

Entities like MFDs, IAs, and online platforms can continue using existing mandates if Payment Aggregators ensure funds are credited directly to a mutual fund pool or scheme account. New mandates after April 1, 2022, must be exclusively for mutual fund scheme subscriptions.

Asset Management Companies (AMCs) will be liable to unit holders for any breach of conditions or misuse of funds by Payment Aggregators or other entities (OTM Holders) concerning mandates for mutual fund transactions.

For online redemptions, Two-Factor Authentication will be used, with one factor being a One-Time Password sent to the unit holder's registered email/phone. For offline redemptions, a signature method will be used. For demat redemptions, the process laid down by Depositories will be followed.

Notification No : SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29
Source : https://www.sebi.gov.in/legal/circulars/mar-2022/discontinuation-of-usage-of-pool-accounts-for-transactions-in-the-units-of-mutual-funds-clarifications-with-respect-to-circulars-dated-october-4-2021_56887.html

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