The Securities and Exchange Board of India (SEBI) issued a notice in March 2013 inviting applications for entities interested in becoming a self regulatory organization (SRO) of mutual fund distributors. An SRO is an association or a group of entities with authority to regulate commission-based distributors of the mutual funds. Investment advisers, those who are remunerated by fees, will not be subject to regulation under this SRO. We understand that it is proposed that registered mutual funds will be charged up to 0.3% of their assets under management to fund the operation of the SRO.

Under the norms set out in the Securities and Exchange Board of India (Self Regulatory Organizations) (Regulations) 2013, applicants must be a registered company under the Companies Act, have a minimum net worth of Rs10 million (approximately US$184,200), have directors who are professionally competent and financially sound, and neither the applicant nor its directors can be involved in legal proceedings connected to the securities market that may have an adverse impact on the interests of investors amongst other criteria.