Skip to content

NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Under SEBI's rules for mutual fund advertisements and distributor communication, which statement is correct about a distributor receiving commission from the AMC?

The distributor must disclose to the investor the commissions received from the AMC, whether trail or otherwise, so that conflicts of interest are visible. Commission is paid by the AMC out of scheme expenses, not set as an investor-paid charge, and non-disclosure breaches the rules.

  1. ACommission need not be disclosed to the investor under any circumstances
  2. BThe distributor must disclose to the investor all the commissions (in the form of trail or any other) received from the AMC, when relevant to the transactionCorrect
  3. CDistributor commission is paid directly by the investor at a fixed rate set by SEBI
  4. DCommission can be paid only as an upfront payment

Explanation

SEBI requires distributors to disclose commissions received from the AMC or the different schemes they recommend, so that the investor can see any conflict of interest. Entry load has been abolished, and commission is paid by the AMC from the scheme expenses, not fixed by SEBI as a payment by the investor.

Did you get it right without looking?

One question tells you little. A timed set on Fund Distribution and Channel Management Practices shows your real accuracy, how long you take and where you lose marks.

Practise Fund Distribution and Channel Management PracticesFree diagnostic mock

More Fund Distribution and Channel Management Practices questions