1. According to the SEBI circular of October 2018, how must AMCs pay the distributors?

2. When is upfront trail commission allowed?

3. Upfronting of trail commission is allowed for how long?

4. What is the maximum percentage of trail commission that can be paid upfront for eligible SIPs?

5. For a firsttime investor starting multiple SIPs, which one is eligible for upfront trail commission?

6. Who pays the upfront trail commission?

7. How is the upfront trail commission amortized?

8. What happens if the SIP is discontinued before the period for which the commission is paid?

9. Who is responsible for recovering the prorata commission if an SIP is not continued?

10. Which of the following transactions is subject to upfronting of trail commission carveout?

11. How is the upfront commission accounted for in the scheme’s Total Expense Ratio (TER)?

12. What must be provided to inspect the upfronting of trail commissions?

13. Which type of investment does the SEBI carveout apply to?

14. The upfronting of trail commission is limited to investors who are investing for the first time in what?

15. In case of misuse of the carveout for SIPs, what action will SEBI take?

16. What percentage of commission can be paid upfront to distributors for SIPs?

17. For how many years is the upfront commission paid in advance for SIPs?

18. Who maintains a record of the amortization of commissions to the scheme(s)?

19. When was the SEBI circular mandating the full trail model of commission released?

20. What is the primary condition for upfronting of commission in mutual funds?

21. How is commission linked to the assets under management (AUM)?

22. What must AMCs ensure when paying trail commissions upfront?

23. In which case is the upfront trail commission recovered prorata?

24. What is the purpose of the ‘carveout’ for SIPs?

25. How does the upfront trail commission impact the Total Expense Ratio (TER)?

26. What is trail commission calculated as a percentage of?

27. How often is trail commission typically paid out to distributors?

28. What factor benefits distributors when calculating trail commissions?

29. If an investor initially buys units at Rs. 10, but the NAV later increases to Rs. 15, on which value is the trail commission calculated?

30. For how long does a mutual fund distributor receive trail commission on an investor’s money?

31. What makes trail commission attractive for distributors in comparison to other financial products like insurance?

32. What is the formula for calculating trail commission for a day?

33. In the provided example, if a distributor mobilizes Rs. 10,00,000 with a 1% p.a. trail commission rate, how much trail commission is earned on August 1, 2019?

34. What happens to trail commission when the NAV of a scheme decreases?

35. Who pays the trail commission to distributors?

36. How is the trail commission calculated in mutual funds different from agent commission in insurance?

37. Why is no commission payable to the distributor for selfinvestments?

38. What must distributors disclose to investors?

39. In the example provided, what is the total trail commission for August 2019?

40. What is the purpose of dividing the trail commission rate by 365?

41. Why might a distributor accumulate a portfolio of loyal investors?

42. What would happen if the NAV of a scheme increased but the number of units remained the same?

43. Which regulatory body mandates the disclosure of commissions to investors?

44. How is the trail commission for SIPs calculated if it is paid upfront?

45. How is trail commission paid in cases where the NAV fluctuates during the investment period?

46. What is one unique feature of trail commissions in mutual funds?

47. How is trail commission linked to the Total Expense Ratio (TER)?

48. If an investor’s investment grows due to market appreciation, how does that affect the distributor’s income?

49. What is the daily trail commission for an investment of Rs. 10,00,000 at a 1% commission rate?

50. In case of upfronting of trail commission, what is not considered in the calculation?

51. What factor ensures that distributors have a rising income over time?

52. What happens when additional investments are made by the same investor?

53. What must AMCs ensure when paying upfront commissions?

54. What is the key regulation regarding selfbusiness investments by distributors?

55. How do changes in NAV affect the calculation of trail commission?

56. What is the primary goal of SEBI allowing mutual funds to charge additional expenses for distributors in B30 locations?

57. What is the transaction charge for a firsttime mutual fund investor for purchases of Rs. 10,000 or more?

58. Who is exempt from paying transaction charges on mutual fund purchases?

59. How is the transaction charge deducted from a firsttime mutual fund investor’s investment of Rs. 25,000 at a NAV of Rs. 43.21?

60. How many installments are transaction charges deducted in, for SIP investments exceeding Rs. 10,000?

61. What is a scenario where a transaction charge would NOT be applied?

62. If an investor does not declare their status as new or existing, what will they be considered as?

63. What is the turnover threshold for a person to be liable to pay GST under the GST Act?

64. Who is responsible for paying GST under the reverse charge mechanism for unregistered distributors?

65. Which of the following does SEBI require to be disclosed on AMC websites?

66. How often is data related to distributor commissions submitted to AMFI?

67. What does SEBI require AMC to check for in distributors with excessive portfolio turnover ratios?

68. What is one criterion SEBI uses to mandate due diligence for distributors?

69. What is the “fit and proper” criterion used to assess during distributor due diligence?

70. What can distributors NOT call themselves according to SEBI regulations?

71. What type of service does the term “advisory” refer to in mutual fund distribution?

72. What must a distributor do when selling a product that is deemed inappropriate for a customer?

73. For “execution only” transactions, what must a customer do?

74. What must a distributor disclose when selling mutual fund products of their own group or associates?

75. Who pays the GST for commissions paid to unregistered distributors?

76. What determines the applicability of the transaction charge for SIP investments?

77. Transaction charges are not applied to which of the following?

78. What factor must AMC audit when reviewing distributors?

79. Who must ensure compliance with risk management processes in a distribution business?

80. How must a distributor treat multiple customers when charging transaction fees?

81. What information is used to classify an investor as new or existing?

82. Distributors can optin or optout of charging transaction fees based on what?

83. What action is taken if a distributor has a portfolio turnover rate above industry norms?

84. What must a distributor do before executing an inappropriate transaction?

85. What is NOT required to be disclosed by AMCs regarding distributor commissions?

86. According to SEBI Investor Adviser Regulations, 2013, what is the primary role of mutual fund distributors?

87. In terms of customer relationships, mutual fund distributors can operate under which two categories?

88. What must mutual fund distributors always ensure regarding the products they distribute?

89. What regulation includes misselling in mutual funds under its ambit?

90. Which of the following is NOT considered misselling of mutual fund schemes?

91. If a mutual fund distributor dies, who is eligible to receive the commission?

92. What kind of commission can the nominee receive after the distributor’s death?

93. Which of the following documents is required to claim commission by a nominee in the event of a distributor’s death?

94. Can a new business be registered under the ARN code of a deceased mutual fund distributor?

95. What is a key requirement for a legal heir to transfer the AUM of a deceased distributor?

96. What happens if an investor initiates a change in distributor code?

97. When can a distributor initiate a change in distributor code for a client’s folio?

98. Who is responsible for submitting an investor’s request to change their distributor?

99. What should happen to the old ARN when the AUM is transferred to a new distributor?

100. What type of commission do mutual fund distributors rely on for their longterm income?