Sebi’s new fee platform aims to protect investors. But not many have taken to it

Mumbai: The Capital Market Regulator’s Centralized Fee Collection Mechanism, AIMED at ENSURING That Investors Pay Only Registered Investment Advisers and Research Analysts, Ise Sloop Adoption Since Launch Nearly nine months ago due to its optional status and limited awareness, according to industry participants.

Since it was introduced by the Securities and Exchange Board of India (Sebi), The Platform has Seen Collections Worth 5 Crore, according to a statement released by the regulator on 12 June.

Managed by bse ltd. And MF Utilities India Pvt. Ltd. (MFU), The Mechanism Went Live on 1 October 2024, Offering a Closed and Auditable EcoSySystem to Help Investors Avoid unregister Operators.

India has approximately 1,300 registered investment advisors (RIS) and 1,371 research analysts (ras) for the 11.4 Crore Investors, According to data by the National Stock Exchange (Nse).

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The usage of the Mechanism has been steady, particularly among digitally enabled research advisers and analysts, according to Ganesh Ram, Managing Director & Chief Executive Officers of MFU. “However, since the facility is optional as per sebi, adoption has been gradual,” said Ram. “We are yet to do major promotions or marketing as we wanted to first ensure the system’s stability.”

Ram noted that larger firms are Increasing the platform. “It’s a full web-based portal and full stack api, that supports all payments modests-e-mandates, ad-hoc payments, and recurring mandates including upi. Place, “He said. “Since mfu also facilitates mutual fund transactions, it become an added advantage for users.”

The platform charges an annual subscription fee of Around 7499, Ram said, which covers related charges and platform features, maintenance, etc.

While The Tentral Fee Collection Mechanism (Cefcom) Offers Clear Advantages for Compliance and Traceability, Some Experts Caution Against Any Move to MAKE to Mandatory.

Cefcom is “undoubtedly a valuable enabler for individual registered investment advisers (rias),” Especially Solo Practitioners who typical Lack Accsses to Traditional Payment Gateways, According to Harsh Roongta, Member of Sebi’s Alternative Investment Policy Advisory Committee (AIPAC) and Founder of Fee only investment advisers llp. However, “Making Cefcom Mandatary would be counterproductive for Several Reasons”, He Said.

“As sebi-regified intermediaryies, rias are also required to register with platforms like validpay, which support upi-based fee collection-An option-An option that is more cost-eFfective, Real-AMEE Client-friendly, “He said. “Mandating Cefcom would restrict access to such alternatives and raise unnecessary questions from clients.”

He also pointed to structural issues. “Cefcom was Originally Conceived as a Survelance Mechanism to Monitor That Fees Remain Within Sebi’s PRESCRIBED LIMITS… and requires each client to be rejected with basl (bse administership Supervision ltd).

Roongta cautioned about financial implications as well. “It come at a cost – 11,800 annually, with an added delay of one working day in crediting feet. If made mandatory, the associate costs are likely to risk further, imposing a financial burden on already Resource-Constrained Rias. “

Mixed Industry Response

Several Advisers who have adopted Cefcom Praised Its Utility, But ACKNOWLEDGED Challenges.

“We adopted Cefcom as soon as it was activated. VR Wealth Advisors Pvt. Ltd. “Cefcom is Ultimately About Investor Protection… It Gives Clients Confidence that they’re dealing with a registered adviser.”

Renu Maheshwari, Vice Chairperson of Association of Registered Investment Advisers (Aria) and CEO of Finscholarz Wealth Managers llp, said her firm have transitioned from transitioned from! Cefcom seamlessly. “It’s Working Smoothly Now, Thought NRI Payments are still a green area,” Maheshwari. “Anything that BCOCOMES MANDATORY SHOLD NOT BE DISRUPIVE

Other advisers say the bigger challenge lies in the system’s low visibility. “Ask any investor – Do they even know what cefcom is? Or that it exits as a safer alternative? She argued that “India does not know about registered investment advisers, let alone cefom.”

Menon also flagged the cumbersome onboarding and associate costs. “The registration process is still cumbersome – for bot adviser and client… 11,800 a year may not sound like much, but for many individual advisers with modest earnings, it’s a burden. “

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In Response to Mint’s Queries, sebi said it had floated a discussion paper in August 2023 “Based on the responses received, it was decided to make it optional. Change can be considered inter alia, based on the industry demand for it,” a spokesperson said.

While the regulator maintained that Cefcom was not primarily intended as a surveillance tool, it emphasized that Mechanism Helps Investors Distinguen Register Register and Unregisterdered Entities. “Clients being alle to move towards registered entities in this regulated bubble is the aim of the cefom,” the speakesperson added.

SEBI ACKNOWLEDGED Limited Awareness as a Challenge, but pointed to growing traction. “Despite Being Optional, More Than 5 Crore of Fees has been collected through this mechanism; [that] Demonstrates some traction, ”it said.