Regulatory Framework for RTAs and Mutual Funds
Domain 4: Regulatory Framework for RTAs and Mutual Funds
This domain tests the rulebook: SEBI (Mutual Funds) Regulations, 1996, RTA registration and conduct requirements, AMFI codes, SEBI circulars on operations, and the governance split among sponsor, trustee, AMC, custodian and RTA.
Core rules and concepts
- Mutual funds are constituted as trusts and regulated by SEBI. The sponsor establishes the trust; trustees oversee the AMC and scheme operations; the AMC manages investments and launches schemes; the custodian holds securities; the RTA maintains folios and investor records.
- An RTA to a mutual fund must be registered with SEBI under the Registrars to an Issue and Share Transfer Agents regime and must follow conduct, record-keeping, confidentiality and reporting obligations.
- SEBI circulars govern cut-off times, NAV applicability, KYC, nomination, total expense ratio, scheme categorisation, disclosures and grievance handling. AMFI issues best-practice codes, but SEBI regulation prevails.
- The RTA cannot alter scheme features, guarantee NAV or approve a change in fundamental attributes; such decisions follow trustee/AMC/SEBI processes and unitholder communication.
Worked example
An AMC proposes to change a scheme's fundamental attribute. The RTA's role is operational: identify affected folios, dispatch notices, record unitholder responses/exit requests and process redemptions at the applicable NAV. The RTA does not approve the change; the trustee/AMC does, within SEBI's framework.
Traps
Do not cite AMFI circulars as law; do not confuse trustee and AMC duties; do not assume RTA registration covers unrelated activities or removes conduct obligations; do not overlook SEBI circular amendments.