On Tuesday, Sebi Chairman CB Bhave met chief executive officers (CEOs) of all fund houses to take stock of the ground realities after the new guidelines.Industry sources said while the fund houses explained that the industry was still in a nascent stage and imposition of stringent guidelines would stifle its growth, the market regulator told them to adjust within the new guidelines.

Industry players, while admitting that the step was in the right direction, said such developments were much ahead of their time.

“Sebi’s moves have moderated the distributors’ compensation and they certainly are not happy. There is no overnight solution to this new development,” said the CEO of a large domestic mutual fund house who did not wish to be named.

While fund managers said there would be three-four months before the industry would be able to gauge the impact of the guidelines, they felt their collections could be hurt. “The market regulator may have to come up with corrective measures if things do not improve,” said the CEO.

Sources added that fund houses with high cost structure would become increasingly uncomfortable in case the adjustment takes longer. “The trend will be visible from the industry’s August numbers,” said another leading fund manager.

Sebi had banned the entry load charged by fund houses from August 1. In the new regime, distributors would have to negotiate the commission with customers and be paid through a different cheque.

Also, distributors would have to disclose the commission they were being paid for similar products.

In yet another move, the market regulator had asked fund houses to stop discriminating between high networth and retail investors and charge them the same exit load.

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