Distributor News. Index. Product Level Options. From CEO s Desk. Volume 1, Issue 1 December 2012

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1 Distributor News Volume 1, Issue 1 December 2012 From CEO s Desk CAMS is happy to release the first issue of Distributor News. Distributor community plays a vital role in the development of Mutual Funds. There have been many changes in the recent past relating to Distribution of Mutual Funds. With a view to disseminating information to distributors we thought that a News Letter of this nature would be of help. We are happy to release this issue for the benefit of distributors and trust this will enhance their capability to serve investors. We look forward to your feedback. With Season s Greetings and Wishes for a Happy 2013 N K Prasad President & CEO Index Product Level Options Employee Unique Identification Number ( EUIN) Centralized Distributor Maintenance Product Level Options Product Type level Option - Transaction Charges based on Product type SEBI vide its circular no CIR/IMD/DF/21/2012 dated13-sep-2012 has, in partial modification to SEBI circular no. Cir/ IMD/ DF/13/ 2011 dated August 22, 2011, advised that distributors shall have the option to either Opt - in or Opt - out of levying transaction charge based on type of the product. The following are the product categories that currently exist. S. No. Type of product 1 Liquid/ Money Market Schemes 2 Gilt Schemes 3 Debt Schemes 4 Infrastructure Debt Fund Schemes 5 Equity Linked Saving Schemes 6 Other Equity Schemes 7 Balanced Schemes 8 Gold Exchange Traded Funds 9 Other Exchange Traded Funds 10 Fund of Funds investing Overseas 11 Fund of Funds Domestic Accordingly AMFI decided to open a special window up to November 17, 2012 for enabling distributors to exercise option at Product level. Distributors have exercised their desired option for any/some of the above product types, by submitting Option Letter to CAMS Point of Service (POS) Service (CDMS) MIS on Distributors. Newsletter 1

2 Consolidated list of Opt in has been sent to all AMCs and RTAs. These modifications in the options are effective from 1st December 2012 Frequently Asked Questions on Options Distributor Question 1: I have not given any option. What would be the position of the business canvassed by me? ANSWER: Including the Special Window which was open till 17 th November 2012, totally there were four Option windows. If you have not given your option in any of the above windows then your ARN would fall under Opt out which is the default and no transaction charges would be deducted from the business mobilized under your ARN. Distributor Question 2: I had given opt-in during the first window period. Thereafter I have not changed my option in any of the option window. What would be the position of the business canvassed by me? ANSWER: If you have given the Opt-in during the first window and have not modified the option in any of the subsequent option windows, your ARN would be Optin and transaction charges would be deducted from the business mobilized by you. Distributor Question 3: In the first window I opted in. In the second window I opted out. Thereafter I have not changed my option in any of the option window. What would be the position of the business canvassed by me? ANSWER: Since your last option during the second window was opt out, your ARN will be under opt out and no transaction charges will be deducted from the business mobilized by you. option during the Special Option Window during November What would be the position of the business canvassed by me? ANSWER: Since you have opted in during the third window and have not modified the option during the special window during November 2012, your ARN will be under Opt-in for all the Product types and transaction charges would be deducted from the business mobilized under your ARN. Distributor Question 5: During the first three Option windows when I gave the Option, there was no product level option. How will the option exercised then be treated? ANSWER: In the first three Option windows three option windows there was no Product level Option. Hence if you have opted in during any of the first three option windows and have not modified the same during the special Option Window in November 2012, then your ARN will be under Opt-in for all the product types and transaction charges would be deducted from the business mobilized under your ARN. Distributor Question 6: When will be next Option window? ANSWER: Next Option window will be from 1 st March 2013 to 25 th March 2013 and the same will be effective from 1 st April Distributor Question 7: I have exercised the option during one of the window period. Will it be applicable for all the Mutual Funds? ANSWER: The option exercised for a particular product category will be valid across all Mutual Funds. Distributor Question 8: Should I inform the investors about the applicable transaction charges? Distributor Question 4: During the third Option window, I have opted in. I have not given any ANSWER: Yes Continued Newsletter 2

3 Distributor Question 9: Is there any undertaking in this regard? ANSWER: You have to give the following undertaking: I/We agree to keep all my / our investors informed of the applicable transaction charges. I/We agree not to indulge in any kind of malpractice/mis-selling, including unwarranted splitting of investments and wrong declarations of a new investor for the purpose of receiving transaction charges. I/We understand that no transaction charge will be levied for any transaction routed through the stock exchange route. I/We understand and agree that the transaction charges will be levied only from the date of updation of Option Letter as above and not from the date of its submission. The above Option Letter will be considered to be in force, till such time a written application to the contrary, is submitted during the specified dates. Distributor Question 10: How the Option given to AMFI will be intimated to AMCs and RTAs? ANSWER: AMFI Unit of CAMS has already intimated all the AMCs and RTAs about the Option exercised by you. Distributor Question 11: I am a Corporate Employee. Should I also exercise the Option for transaction charges? ANSWER: Option can to be exercised by all the KYD complied ARN holders. Corporate Employees cannot exercise the Option. Employee Unique Identification Number (EUIN) Back ground: AMFI has been allotting the ARN to the Corporate Distributors and a Certificate was issued to the Company. For the Corporate Employee, upon submission of application and the required fee, an ARN card is being issued mentioning the ARN number of the corporate who is his employer. SEBI vide its circular no CIR/IMD/DF/21/2012 dated13-sep-2012, has said that AMFI shall create a unique identity number for the employee/ relationship manager / sales person of the distributor interacting with the investor for the sale of mutual fund products, in addition to the AMFI Registration Number (ARN) of the distributor (Corporate). Also, the application form for mutual fund schemes shall have a provision for disclosing the unique identity number of such sales personnel along with the ARN of the distributor. EUIN Generated: AMFI unit in CAMS has generated and issued Employee Unique Identification Number (EUIN) for employees of distributors who are currently registered with AMFI and having a valid registration. Corporates advised: CAMS has advised all the Corporate distributors a consolidated list of all the employees of the distributor who are currently registered and having a valid registration and have advised that the employees should submit: Distributor Question 12: Is there any fee for registration of Option status or modification of Option status? ANSWER: As per present AMFI policy there is no fee to exercise Option. o o two stamp size color photographs Surrender existing corporate employee ARN card issued to them to enable CAMS to issue them EUIN card. Continued Newsletter 3

4 In case the employee does not return the corporate employee ARN card issued earlier, any misuse of the same will be at the risk, responsibility and liability of the organization/ employee. Further we have advised that in case, any of the employees as per the list sent to the corporate are not working with them and have left the Organization, they should bring it to our notice for further action. In case, there are employees in your Organization who are engaged in selling and marketing Mutual Fund Products and not yet registered with AMFI, AMFI has advised to register them with AMFI immediately. Employees Advised: CAMS has advised all the Corporate Employees whose registration is current with AMFI, the EUIN generated and the ARN of the Corporate under whom he is currently registered. In this communication CAMS has requested the Employee to: o submit two stamp size color photographs o complete the tear away portion of the letter o surrender the ARN card issued to him for CAMS to issue the EUIN card. In case the employee does not surrender the Corporate Employee ARN card, any misuse of the card will be at his risk, responsibility and liability Further, in case he leaves the current job of above corporate under which he is registered, it would be his responsibility to inform CAMS immediately. Corporates with No employee advised: AMFI has advised that Corporate ARN holders o where no employee is registered. o where none of the employees registered with AMFI are having valid registration advising them not to canvass Mutual Fund business without registering employees with AMFI under their ARN / renewing registration of existing employees. In case the ARN holder has a Proprietary structure and do not have any employees engaged in selling and marketing mutual fund products, they should immediately respond to the letter confirming the same, by way of a letter signed by the Authorized Signatory as per our records. Brokerage not to be paid if no employee is registered for Corporate ARN: AMFI has advised all the AMCs that the Corporate distributors o where no employee is registered. o where none of the employees registered with AMFI are having valid registration can not be paid commission for the business canvassed by them, if any, till the employees who are engaged in selling and marketing of mutual fund products are registered with AMFI and obtained EUIN. This list is periodically updated and sent to AMCs. Registration of Employees under Individual / Senior Citizen ARN holders As some of the Individual ARN holders/ ARN holders registered under Senior Citizen category have employees/ relationship managers/ sales persons working under them for selling and marketing Mutual Fund products under their ARN AMFI has advised that the individual ARN holders as well as ARN holders registered under senior citizen category to register these employees under their ARN and obtain the Employee Unique Identification Number (EUIN) for them. The said EUIN of such sales personnel is also required to be disclosed on Mutual Fund Scheme application form along with the ARN of the distributor. If the distributor has employed any person for selling/ marketing mutual fund products, they are advised to Continued Newsletter 4

5 submit the application for registration of all such employees/ relationship manager/ sales person along with the required documents and fees, to any CAMS Point of Service (POS) near to your location and also obtain EUIN for them, latest by January 15, Further, in case he leaves the current job of above corporate under which he is registered, it would be his responsibility to inform CAMS immediately. Frequently Asked Questions on Options Question 1: I am a corporate employee and I was given an ARN card with my photograph and the ARN of my employer. I surrendered my ARN card for issue of EUIN card. Will I be issued a ARN card also? Answer: No. You will be issued an EUIN card with your photograph and will not be issued an ARN card. Question 2: I have a corporate employee ARN card. I want to be issued EUIN card. Is there any fee for this? Answer: As a onetime measure, AMFI has decided to issue the EUIN card in lieu of the ARN card free of cost. However the EUIN card will be issued for the same period for which the ARN was issued to you. Question 3: I have an ARN card and the same is due for renewal. What should I do? Answer: Please down load the ARN renewal Form for Individual / Corporate Employee ARN holders from AMFI site and complete the same. Tender the application along with the fees mentioned in the AMFI website to the CAMS front office for renewal. You will be issued EUIN card. Question 4: Will the EUIN card carry the ARN of my employer? Answer: No. It is unique to the employee and therefore it will not have the ARN of the employer. Question 5: What is the fee for issue of fresh EUIN card? Answer: With effect from 1st November 2012, AMFI has revised the fees downward for ARN registration. For Corporate employees the fees Corporate Employees* No of Corporate Employees First 100 Employees Incremental 101 to 200th Employees Incremental 201 to 500th Employees Incremental above 500th Employees As per Grid Below Fees per Employee (Rs.) 3,000 2,000 1, *Corporate employees 'per employee fee structure' is applicable incrementally. For example: if an organization has 150 employees and they want to register all the employees with AMFI, it will cost them (Rs.3,000/- x 100) + (Rs.2,000/- x 50) = Rs.4,00,000/-. Distributors with existing Corporate employee registration to get benefit of incremental cost reductions. b. The quantum of Incremental benefit will also be determined based on the number of valid employees registration as on the date of receipt of application for registering additional employees of the company. For example: If company has already registered 100 employees and submitted application for additional 50 employees, however, from the record it is observed that out of 100 employees registered earlier, in case of 25 employees, ARN validity has been expired then incremental benefit will be restricted to 25 new applications out of application received for 50 employees. Continued Newsletter 5

6 c. Along with the application for additional registration of employees, company should also give confirmation in writing that all the employees registered earlier are continuing with them and have a valid ARN card as of the date of application. Question 6: What is the fee for Renewal of EUIN? Answer: Fees for Renewal of ARN will be 50% of the fees payable for Fresh Registration under respective Category of Distributors. Question 7: I was working under a corporate distributor and I was issued EUIN. Now I have changed my employer and I am going to work under another corporate distributor. What is the procedure for change? Is there any fee? Answer: You have to complete the form for mapping EUIN from AMFI website. You should forward the application along with Copy of EUIN card Relieving letter from the present employer. Duly signed certificate from the newly mapped ARN holder as per the form. Copy of the employment letter of new employer. There is no fee for change in Mapping of ARN during the validity of EUIN. Question 8: I was working under a corporate distributor and I was issued EUIN. Now I want to work as an IFA. What is the procedure? Answer: You have to surrender the original EUIN card to CAMS for cancellation. You need to apply in the Individual ARN holder application form along with the requisite documents and fee for issue of ARN to you. The application form may be downloaded from AMFI website. Centralised Distributor Maintenance Service (CDMS) With a view to providing convenience to distributors, AMFI has decided to centralize the data base of all the Mutual Fund Distributors with effect from The centralized data base will contain the static data of the distributors and all the Mutual Funds and Registrars and Transfer Agents of Mutual Funds will consume this database for all the purposes. Many Distributors are empanelled with multiple AMCs. Such distributors are required to send separate request to each AMC for any change in their details, self declaration, etc. Centralization as mentioned above makes life simple for you, as you are required to submit only one request with only one entity i.e. AMFI unit of CAMS or CAMS Service Centre that will ensure that the changes are updated in all Funds where you are empanelled. AMFI has sent a letter to all the KYC complied distributors with their current details available with AMFI for their ARN and has requested them to verify the same and revert to AMFI unit of CAMS or to the CAMS Service centre if there is any change in the data on or before in the format attached. If the distributor has not registered ID and mobile number, the same can be registered now. The Distributor can provide up to 5 IDs and 5 mobile numbers for registration. AMFI also proposes to register up to five bank mandates for an ARN holder and the distributor will have the option to select any of these bank mandates for receiving the commission payments. For this purpose AMFI has requested the distributors to provide the bank mandate details along with a cancelled cheque/s to AMFI unit of CAMS or to any of the CAMS service Centre. Continued Newsletter 6

7 If the distributor is submitting any change of address, he should provide the proof of address as per the KYD application. Non-Individual Distributors should provide the Authorized signatories list along with their specimen signatures. In future AMCs, RTAs will refer to only this ASL available with the central unit. After the above specified date ( ) this data will be shared with all the Registrars and Transfer Agents of Mutual Funds and the AMCs and this will be the central data. Thereafter, any modification in this data has to be submitted to AMFI unit of CAMS or the CAMS Service Centre and not to individual AMCs / RTAs. After this central database goes live, individual AMCs will not accept any change request from any distributor. As this is centralized data, distributors are advised to verify the correctness of the data to ensure accuracy and revert to CAMS AMFI unit for any modification on or before Newsletter 7