DIRECT Investment
What is the SEBI guideline on 'DIRECT' investment all about?
In the interest of the investors, The Securities and Exchange Board of India (SEBI) has mandated that no entry load shall be charged for 'DIRECT' applications received by the Asset Management Company (AMC) i.e. applications received through Internet, submitted to AMC or collection centre / Investor Service Centre that are not routed through any distributor/agent/broker. This circular shall be applicable to:
- Investments in existing schemes with effect from January 4, 2008 and in new schemes launched on and after the said date.
- Additional purchases done directly by the investor under the same folio and switch-in to a scheme from other schemes if such a transaction is done directly by the investor.
Since when will the waiver of entry load for 'DIRECT' applications be effective?
The waiver of entry load for 'DIRECT' applications will be effective from January 4, 2008.
Is it applicable only for fresh investments?
New / additional subscriptions, existing Systematic Investment Plans (SIP) and Systematic Transfer Plans (STP) not routed through a distributor / broker / agent will not attract entry load.
Would the entry load on a switch transaction be waived off in case it is routed directly, even if the transferee scheme attracts entry load?
Any transaction routed directly, i.e. without a broker, would not attract any entry load.
Will I be charged an entry load for my existing SIPs / STPs registered before January 4, 2007, which were routed directly?
No entry load will be applicable for the installments falling on or after 04th January 2008 for SIP / STP routed directly, i.e. without a broker. Units will be allotted for the entire amount of redemption.
For my existing SIP / STP can I change my broker code to 'DIRECT' for future installments?
Yes. A written request has to be given by the investor(s), depending on the mode of holding, for change of broker to 'DIRECT'. For all the future installments the entry load will be waived off. However, the request should be submitted at least 10 days before the next SIP / STP date.
Is there any waiver of exit loads in the equity schemes?
There is no change in the exit load provisions.
If I have an existing investment routed through a broker in a folio, will I be charged entry load for additional purchases?
The investments would continue to be routed through the recorded broker unless specifically instructed by the investor by mentioning 'DIRECT' on the application form / transaction slip and signed by the Unitholder(s), depending on the mode of holding. If the broker code is preprinted then the same has to be struck off and countersigned by the investor(s), depending on the mode of holding. In addition the word 'DIRECT' should be written on the transaction slip.
If no broker code is mentioned on the transaction slip would the transaction be treated as 'DIRECT'?
Yes.
If the broker code on the transaction slip is modified or changed to 'DIRECT', will an entry load be charged?
The change / alteration has to be countersigned by the investor(s), depending on the mode of holding. Only then the investment will be treated as 'DIRECT' and no entry load will be charged.
If I invest through , will I be charged entry load on my purchase / switch transaction?
Only if the investor selects the broker code as 'DIRECT' while transacting online, there will be no entry load for the purchase / switch transaction.
How many days before the next SIP / STP installment date should I submit the change of broker code request in order to ensure that it is updated and that no entry load is charged on my next installment?
You are required to submit the change of broker code request at least 10 days prior to your next SIP / STP installment date.
What is the Turn Around Time (TAT) for change of broker code request to be updated?
A change of broker code request would take approximately one week to get updated.
Would my folio details be disclosed to my previous broker once my broker code is updated as 'DIRECT'?
No. However, we would intimate your old broker about the change of broker code.
Can I submit a change of broker code request to CAMS directly?
Yes, as long as it is authorized by the Unitholder(s), depending on the mode of holding. However, the procedure would be different for the Channel Distributors. In such case, the documents have to be routed through the Channel Distributor.
If I request a change of broker code to 'DIRECT' for my transaction dated before January 4, 2008, will my units be recreated?
No. The said guideline is effective January 4, 2008.
If I invest directly, can I later add a broker?
Yes. A written request has to be submitted for change of broker code signed by the Unitholder(s), depending on the mode of holding. However, the procedure would be different for the Channel Distributors. In such case, the documents have to be routed through the Channel Distributor.
If I add a broker to a 'DIRECT' transaction (transaction already effected), would the broker be eligible for commission?
Yes, the broker would be eligible for the trail commission from the date the broker code is added in the scheme.
After I change my broker code to 'DIRECT', would my previous broker continue to receive the trail commission?
No.
I have transacted through ICICI Direct. Would my investment be subject to entry load?
No Entry Load is applicable.