**Summary:**
This circular, issued by the Securities and Exchange Board of India (SEBI) on February 26, 2020, under reference number SEBI/HO/MRD/DSA/CIR/P/2020/29, expands access to mutual fund transactions through stock exchange infrastructure. The circular amends previous directives (CIR/MRD/DSA/32/2013 dated October 04, 2013, and CIR/MRD/DSA/33/2014 dated December 09, 2014, and SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016) to now allow investors to directly purchase and redeem mutual fund units from Asset Management Companies (AMCs) via recognized stock exchanges. Previously, this access was limited to mutual fund distributors and SEBI Registered Investment Advisors (RIAs). The circular empowers recognized stock exchanges, clearing corporations, and depositories to modify their bylaws, rules, and regulations to implement this change. This directive is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Section 10 of the Securities Contracts Regulation Act, 1956, to protect investors and promote securities market development. The circular is available on the SEBI website. For further information, contact Sanjay Purao, General Manager, Market Regulation Department, at 022-26449343 or sanjayp@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): Regulatory body for the securities market in India, responsible for protecting investors and promoting market development.
Stock Exchanges: Recognised entities that provide a platform for trading securities.
Clearing Corporations: Entities that facilitate the clearing and settlement of securities transactions.
Depositories: Organisations holding securities in electronic form.
Mutual Fund Asset Management Companies: Companies that manage mutual fund schemes.
Registered Investment Advisors (RIAs): Investment advisors registered with SEBI.
Securities and Exchange Board of India Act 1992: The act of parliament that established SEBI and defines its powers and functions.
Securities Contracts Regulation Act, 1956: An act to prevent undesirable transactions in securities by regulating the business of dealing therein
CIRCULAR
SEBI/HO/MRD1/DSAP/CIR/P/2020/29 February 26, 2020
To
All recognised Stock Exchanges, Clearing Corporations and Depositories (except Stock
Exchanges and Clearing Corporations in International Financial Services Centre)
Dear Sir/ Madam,
Subject: Facilitating transaction in Mutual Fund schemes through the Stock
Exchange Infrastructure
SEBI vide its Circular no. CIR/MRD/DSA/32/2013 dated October 04, 2013, and
CIR/MRD/DSA/33/2014 dated December 09, 2014 had permitted mutual fund distributors
to use recognised stock exchanges' infrastructure to purchase and redeem mutual fund
units directly from Mutual Fund / Asset Management Companies.
2. Subsequently, SEBI vide its Circular no. SEBI/HO/MRD/DSA/CIR/P/2016/113 dated
October 19, 2016 allowed SEBI Registered Investment Advisors (RIAs) to use
infrastructure of the recognised stock exchanges to purchase and redeem mutual fund
units directly from Mutual Fund/ Asset Management Companies on behalf of their
clients, including direct plans.
3. In order to further increase the reach of this platform, it has been decided to allow
investors to directly access infrastructure of the recognised stock exchanges to
purchase and redeem mutual fund units directly from Mutual Fund/ Asset
Management Companies.
Page 1 of 24. The recognised stock exchanges, clearing corporations and depositories may make
necessary amendment to their existing byelaws, rules and/or regulations, wherever
required.
5. This circular is issued in exercise of the powers conferred under Section 11(1)
of the Securities and Exchange Board of India Act 1992, read with Section 10
of the Securities Contracts (Regulation) Act, 1956 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
6. This circular is available on SEBI website at www.sebi.gov.in at “Legal
Framework→Circulars”.
Yours faithfully,
Sanjay Purao
General Manager
Market Regulation Department
Tel. No: 022-26449343
sanjayp@sebi.gov.in
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