The prospect of extended stock market hours soon is giving mutual funds some nervous moments. The anxiety is over the additional pressure that the extra trading hours will put on the mutual funds and custodians to meet the daily deadline to submit the net asset values (NAV) of equity schemes. As per existing norms, the NAVs have to be uploaded on the Association of Mutual Funds of India (AMFI) website before 9 pm everyday. While custodians, who manage the back-office operations of mutual funds, just about manage to meet the deadline at the moment, mutual fund and custodian officials said the extension of trading hours will make it difficult for them to meet the deadline. “Even when the markets closed at 3.30 pm, we just about managed to submit the NAVs before deadline. Now, at 5 pm, we do not know how will we meet it, especially with the quality checks that need to be followed,” said a top official with a leading private mutual fund.
Last week, capital market regulator Sebi, in a circular, permitted stock exchanges to begin the day as early as 9 am and keep the market open for trading till 5 pm. Mutual fund officials said the deadline to submit NAVs will need to be extended by at least an hour-and-a-half, if the stock market’s close is stretched to 5 pm. A top Sebi official told ET that the matter will be considered once the new timings are implemented by exchanges, though he added that the industry is yet to approach the market regulator to extend this deadline. One of the hindrances to uploading the NAVs on time is the delay by stock exchanges in releasing the final data on futures and options, which are a part of the portfolio of several equity schemes today. Currently, the final derivatives data arrives at around 6 pm. Mutual funds are worried that setting up new systems, including more manpower, will result in escalation of costs, especially when business has been hit following the new fee structure for distributors in August. Custodians said insurance companies also may be burdened with higher costs, as they need to adhere to similar deadlines to submit NAVs for the unit-linked Investment Plan (Ulips), which constitute a sizeable chunk of their assets.
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