In a move that could revolutionise sale and purchase of mutual fund units by investors across the country, the Association of Mutual Funds in India (Amfi) is working towards setting up an electronic platform.
This would not only benefit unitholders, but also distributors and fund houses. The electronic platform will bring paperwork to a bare minimum, improve operational efficiency, provide transaction convenience and reduce cost. The proposed electronic platform will help investors trade even in open ended-mutual fund scheme units, like in the case of shares, switch between schemes of different fund houses, and also enable mutual fund investors to view their entire portfolio on a single portal. The modalities of the platform are being worked upon by an Amfi-appointed committee.
At present, if an investor wants to buy units of a scheme, online, he has to go to the website of that fund house. He can switch between the schemes of that particular fund house, but not among schemes of different fund houses.
Also, only close-ended schemes can be traded among investors, currently. To buy or sell units of an open-ended scheme, the investor has to visit the distributor or approach the fund house directly.
The Amfi committee last week received 15 expressions of interest (EoI) from both international and domestic companies including Canada-based FundSERV, focusing on the data standards and security infrastructure.
Indian mutual fund industry has so far about 4.6 crore folios (investors), of which more than 95% is held in the physical format. The electronic platform, which could take two years to implement, will not not only ramp up the present model, but also benefit the next generation of mutual fund applicants, who are expected to grow exponentially. “We feel that transactions will happen on wireless devices and are looking at ways to leverage these platforms,” said Jaideep Bhattacharya of UTI MF who is the chairman of this committee.
Sebi chairman CB Bhave, who was instrumental in implementing the demat process for shares, had recently suggested that MF investors should also have a common statement for all their mutual fund holdings just like the system for equities through depositories like NSDL and CDSL.
Market players say that in the present system, registrars don’t share any information about their clients with their competitors. The new option will co-exist with the present model, in which it takes about 3-10 days in a normal scenario depending on the location from where the application comes. Often, transaction statements are lost in transit.
The new platform is likely to be replicated on the same lines that is operational in several foreign countries such as in Canada, US and Australia. FundSERV,which is one of the interested parties to offer this service in India, is a leading provider of electronic business services to the Canadian investment fund industry.
In another investor-friendly initiative Amfi has set up a committee, headed by Vivek Kudva of Franklin Templeton, to simplify the application forms of mutual funds,in order to develop a common form. Recently, Sebi simplified the offer documents of mutual fund schemes and standardised the format of abridged, scheme-wise annual report.
This would not only benefit unitholders, but also distributors and fund houses. The electronic platform will bring paperwork to a bare minimum, improve operational efficiency, provide transaction convenience and reduce cost. The proposed electronic platform will help investors trade even in open ended-mutual fund scheme units, like in the case of shares, switch between schemes of different fund houses, and also enable mutual fund investors to view their entire portfolio on a single portal. The modalities of the platform are being worked upon by an Amfi-appointed committee.
At present, if an investor wants to buy units of a scheme, online, he has to go to the website of that fund house. He can switch between the schemes of that particular fund house, but not among schemes of different fund houses.
Also, only close-ended schemes can be traded among investors, currently. To buy or sell units of an open-ended scheme, the investor has to visit the distributor or approach the fund house directly.
The Amfi committee last week received 15 expressions of interest (EoI) from both international and domestic companies including Canada-based FundSERV, focusing on the data standards and security infrastructure.
Indian mutual fund industry has so far about 4.6 crore folios (investors), of which more than 95% is held in the physical format. The electronic platform, which could take two years to implement, will not not only ramp up the present model, but also benefit the next generation of mutual fund applicants, who are expected to grow exponentially. “We feel that transactions will happen on wireless devices and are looking at ways to leverage these platforms,” said Jaideep Bhattacharya of UTI MF who is the chairman of this committee.
Sebi chairman CB Bhave, who was instrumental in implementing the demat process for shares, had recently suggested that MF investors should also have a common statement for all their mutual fund holdings just like the system for equities through depositories like NSDL and CDSL.
Market players say that in the present system, registrars don’t share any information about their clients with their competitors. The new option will co-exist with the present model, in which it takes about 3-10 days in a normal scenario depending on the location from where the application comes. Often, transaction statements are lost in transit.
The new platform is likely to be replicated on the same lines that is operational in several foreign countries such as in Canada, US and Australia. FundSERV,which is one of the interested parties to offer this service in India, is a leading provider of electronic business services to the Canadian investment fund industry.
In another investor-friendly initiative Amfi has set up a committee, headed by Vivek Kudva of Franklin Templeton, to simplify the application forms of mutual funds,in order to develop a common form. Recently, Sebi simplified the offer documents of mutual fund schemes and standardised the format of abridged, scheme-wise annual report.
http://economictimes.indiatimes.com/Personal_Finance/Amfi_plans_e-platform_to_trade_units/articleshow/3434134.cms
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