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21.Explain the role of AMFI as a market regulators.
The market regulators, SEBI and the AMFI have been working on nearly all the regulatory aspects to make the Mutual Fund Industry among the best regulated and the most tranparent Industry in the financial sector. The objective before any regulators is to improve the market efficiency and protect the interest of the larger section of the market participants. The regulator provides the direction to the market and in turn ,the market has to evolve and mature . There are certain activities more in the nature of compliance , etc., which are rather easy to regulate .However , there are other activities for which regulation is more difficult. Activities like the quality of the advice the Mutual Fund advisor provides is not easy to regulate. Efforts to regulate services not amenable to regulation often add to the complexity of the regulation . It also slows down the pace of development. Beyond a point, the market evolution is left to best practices .The best practice is an unobtructive tool for market regulation. The Indian Fund Industry is now ready for transition from government regulation to market regulation.
Ans: AMFI is established on the lines of the Investment Company Institue (ICI), the national association of the US investment companies. Incorporated on August 22,1995 as a not for profit organization , AMFI has also set up a Committe on Valuation of Mutual Funds, Committe on Best Practices, Committe on RBI related matters and Committe on Registration of AMFI Certified Distributors for reviewing and evolving standardsin the Mutual Fund Industry. Though technically not as SRO, AMFI has , right from its inception , performed self-regulatory functions like giving clarifications on payment to intermediaries , training the Mutual Fund distributors and educating the investors.