MF rules amendment in the offing

FE Report

The securities regulator will bring amendment to the rules of mutual funds (MFs) in an effort to make trustees, custodians and asset management companies (AMCs) more accountable to the regulator for the interest of unit holders, officials said.

The official sources of the Bangladesh Securities and Exchange Commission (BSEC) said the main objective of bringing amendment is to ensure better performance of the AMCs.

"At first the regulator will work on the possible proposals for the amendment to the rules of MFs. Among others, the provision of prompt disclosures of the MFs can be included in the amendment," said the BSEC official source.

According to the source, the accountability of trustees and custodians of the MFs will also be increased if the proposed amendment to the rules of MFs comes into effect.

When asked, whether the management fee of the AMCs will be fixed based on their performance a BSEC policy maker said the regulator would seek public opinion before giving final approval to the amendment.

"The regulator may consider the provision of charging management fee based on the performance of the AMCs if the stakeholders want this," the policy maker said.

As per existing provision, an AMC charges the annual fee at the rate of 2.50 per cent on the weekly average NAV up to Tk 50 million, 2.0 per cent per on additional amount of weekly average NAV above Tk 50 million to Tk 250 million, 1.5 per cent per on additional amount of weekly average NAV above Tk 250 million to Tk 500 million and 1.0 per cent per on additional amount of weekly average NAV over Tk 500 million.

Presently, there are 40 closed-end MFs listed with the both the bourse. And the number of AMCs is 17.

According to information available with the Dhaka Stock Exchange (DSE), around 60 per cent of the 40 closed-end MFs have failed to give any dividend in 2011 and 2012.

The AMCs, however, blamed the market situation for not giving any dividend in 2011 and 2012.

Along with bringing changes in the rules of MFs, the regulator is also working for bring amendment to public issue rules.

mufazzal.fe@gmail.com

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