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Summary of SEBI Circular SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2024/114
On August 22, 2024, SEBI issued a circular to establish a Centralized Fee Collection Mechanism (CeFCoM) for Investment Advisers (IAs) and Research Analysts (RAs) in response to the growing interest in the securities market. This initiative aims to create a transparent payment system that ensures investors can confirm fees are only paid to registered IAs and RAs.
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Key Points:
Need for Transparency: As investor interest rises, there’s a critical need for a system that clearly delineates fee payments to registered professionals.
Centralized Fee Collection Mechanism (CeFCoM): This new mechanism allows clients to pay fees to registered IAs and RAs through a designated platform managed by a recognized Administration and Supervisory Body (ASB).
Operational Details: Developed in collaboration with BSE Limited, the operational framework will be established by September 23, 2024, with the mechanism becoming operational from October 01, 2024.
Encouragement for Usage: While participation in CeFCoM is optional, the ASB is tasked with promoting its use among clients and registered professionals.
Regulatory Framework: The circular is issued under SEBI’s authority to safeguard investor interests and regulate the securities market as per the Securities and Exchange Board of India Act, 1992.
Accessing the Circular: The circular can be found on the SEBI website under "Legal > Circulars" and "Info For > Investment Advisers" and "Info For > Research Analysts."
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What is the main purpose of the Centralized Fee Collection Mechanism (CeFCoM)?
- A) To increase the number of registered IAs and RAs
- B) To ensure transparent fee payments to registered IAs and RAs
- C) To regulate the fees charged by IAs and RAs
- D) To facilitate unregistered IAs and RAs in fee collection
Answer: B) To ensure transparent fee payments to registered IAs and RAs
When will the Centralized Fee Collection Mechanism (CeFCoM) become operational?
- A) September 23, 2024
- B) October 01, 2024
- C) August 22, 2024
- D) December 31, 2024
Answer: B) October 01, 2024
Which organization is responsible for specifying the operational framework of CeFCoM?
- A) SEBI
- B) BSE Limited
- C) Reserve Bank of India
- D) Association of Mutual Funds in India
Answer: B) BSE Limited
The Centralized Fee Collection Mechanism (CeFCoM) is:
- A) Mandatory for all IAs and RAs
- B) Optional for clients and registered professionals
- C) Only for institutional clients
- D) Not recognized by SEBI
Answer: B) Optional for clients and registered professionals
What is the main legislative authority under which this circular has been issued?
- A) Companies Act, 2013
- B) Securities and Exchange Board of India Act, 1992
- C) Financial Sector Development Act, 2020
- D) Insurance Regulatory and Development Authority Act, 1999
Answer: B) Securities and Exchange Board of India Act, 1992
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