Amfi Code of Ethics

Topics: Mutual fund, Investment, Hedge fund Pages: 6 (2024 words) Published: December 21, 2010
AMFI Guidelines

Intermediaries play a pivotal role in promoting sale of mutual fund schemes. AMFI has therefore taken the initiative of developing a cadre of trained professional intermediaries. As the first step AMFI launched the certification programme in association with NSE's Certification in Financial Markets (NCFM) in July 2000 and SEBI has made AMFI Certification compulsory in a phased manner.

Intermediaries consisting of individual agents, brokers, distribution houses and banks engaged in selling of mutual fund products as of now do not have any guidelines or regulatory framework relating to the business of selling Mutual Funds. It is important and necessary that these intermediaries follow professional and healthy practices. AMFI has therefore taken the initiative of framing a broad set of guidelines along with a code of conduct.

AMFI working group on Best Practices for sales and marketing of Mutual Funds under the Chairmanship of Shri B. G. Daga, Former Executive Director of Unit Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandra shekhar Sathe, Formerly of Kotak Mahindra Mutual Fund has suggested formulation of guidelines and code of conduct for intermediaries and this work has been ably done by a sub-group consisting of Shri B. G. Daga and Shri Vivek Reddy. On behalf of AMFI, I record our thanks and appreciation to all the members of the working group especially Shri B. G. Daga and Shri Vivek Reddy. Both of them have devoted considerable time and efforts in formulating AGNI.

It is our request that all the intermediaries make sincere efforts to adhere to the guidelines and the code of conduct so that all those engaged in the business of selling and marketing of mutual fund schemes follow professional, healthy and best practices for the sustained benefit of all concerned - investors, intermediaries and the Mutual Fund Industry as a whole. 1.Role of Intermediaries in the Indian Mutual Fund Industry oThe mutual fund industry in India started in 1964 with the formation of the Unit Trust of India (UTI). In 1987, other public sector institutions entered this business, and it was in 1993 that the first of the private sector participants commenced its operations oFrom the beginning, UTI and other mutual funds have relied extensively on intermediaries to market their schemes to investors. It would be accurate to say that without intermediaries, the mutual fund industry would not have achieved the depth and breadth of coverage amongst investors that it enjoys today. Intermediaries have played a pivotal and valuable role in popularizing the concept of mutual funds across India. They make the forms available to clients, explain the schemes and provide administrative and paperwork support to investors, making it easy and convenient for the clients to invest oIntermediation itself has undergone a change over the past few decades. While individual agents provided the foundation for growth in the early years, institutional agents, distribution companies and national brokers soon started to play an active role in promoting mutual funds. Recently, banks, finance companies, secondary market brokers and even post offices have also begun to market mutual funds to their existing and potential client bases. oIt is, thus clear that all types of intermediaries are required for the growth of the industry, and their wellbeing, quality orientation and ways of doing business will have a significant impact on how the mutual fund industry in India evolves in the future. 2.Guidelines for Selling and Marketing Mutual Funds

oInvestors can purchase and sell mutual fund units through various types of intermediaries - individual agents, distribution companies, national/regional brokers, banks, post offices etc. as well as directly from Asset Management Companies (AMCs), including the Unit Trust of India oInvestors of...
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