Online platform likely to be in place by March 2010
The market regulator Securities and Exchange Board of India (Sebi) has allowed mutual funds to be traded on stock exchanges.
The stock brokers can now act on the behalf of their clients by acting
as official points of acceptance, under the mechanism set up by stock
exchange.
The regulator has done this with an aim to use the infrastructure of stock exchanges that already exists for the secondary market transactions in over 1,500 towns and cities, through over 2,00,000 stock exchange terminals, for facilitating transactions in mutual fund schemes.
The stockbrokers are required to clear certification exam held by Association of Mutual Funds in India (AMFI) for becoming eligible for empanelment. The stock exchanges are also told to set up an investor grievance handling mechanism for addressing disputes between brokers and clients.
The regulator has asked fund houses to take steps in coordination with Registrar and Transfer Agents (RTA), depositories and depository participants (DPs) in case investors sought to convert existing physical units of mutual funds schemes into a dematerialised form.
According to reports, a common online platform to buy and redeem mutual fund units offered by different fund houses, will be in place by March 2010. Initially, this would an order-entry platform and not a trading platform. But transactions would be much easier - much like investing in a stock.
A common online platform for trading funds will reduce the mutual fund industry's operational costs and help increase mutual fund penetration in smaller cities, where fund houses currently do not have enough distribution facilities.
Inflows into equity funds have declined in the past three months, weighed down by the capital-market regulator's decision to scrap entry load on mutual funds, which came into effect on 1 August 2009.
Asset management companies used to spend a major portion of the money they collected as entry load from investors to pay distributors' commission. With its scrapping, distributors have lost the incentive to sell funds.
India's mutual funds managed average assets of Rs 7,63,000 crore in October 2009.
MY COMMENTS -
No doubt that SEBI, the capital market regulator would have done ample workout before reaching to such a decision. Ironically as per the Mutual Fund reform's are concerned strange things & moves are happening from the regulator end.
I appreciate all of the efforts done by capital market regulator. But, are the Stock Brokers or Day Traders right choice for the selling, distribution & marketing Mutual Fund schemes! Will it really stop churning, miss-selling, honest & ethical financial planning? -DUE TO THESE REASONS. THE DRAFT & FINAL DECISION WHICH WAS MADE BY SEBI VIA THE CIRCULARS ON MUTUAL FUND REFORMS FOR AGENTS/DISTRIBUTORS/ADVISORS ISSUED TILL NOW. THIS WAS INCLUDED IN THE VERY STATEMENTS OF REGULATOR.
AMFI the Mutual Fund governing body which is the representative of Mutual Fund AMC's & the associated intermediaries said in a statement issued by Mr. Kurian that AMFI is already working on the model which would be a common platform for MF selling. And which would be out by March, 2010 approx.
But, SEBI highlighted this before hand in the news. That's good for mental preperation for Investor's. Every change is welcomed but timing of the change has to be seen. The move is quite impressive as far as the reach & depth of Mutual Funds is concerned.
As per the news Demat Account is required. But, how many demat accounts are lying frozen? How many people invest in Stock markets? Hardely 2% to 5% of entire Indian population.
How many retail investors are there in for Stock Market's? How many Stock Brokers are there in Rural India?
Most importantly, How many Indian's have PAN on the first place? Required for Mutual Fund investments, Stock Market Investments & most important Demat Accounts. Not more than 10% of Indian Population?
First, regulators & Finance Ministry should see into the matter of PAN first. The basic requirement for investments made by Finance Ministry itself. I believe first things should come first, shouldn't they?
These all questions have to be thought by SEBI, RBI & FINANCE MINISTRY. And some action is expected by them all.
The regulator has done this with an aim to use the infrastructure of stock exchanges that already exists for the secondary market transactions in over 1,500 towns and cities, through over 2,00,000 stock exchange terminals, for facilitating transactions in mutual fund schemes.
The stockbrokers are required to clear certification exam held by Association of Mutual Funds in India (AMFI) for becoming eligible for empanelment. The stock exchanges are also told to set up an investor grievance handling mechanism for addressing disputes between brokers and clients.
The regulator has asked fund houses to take steps in coordination with Registrar and Transfer Agents (RTA), depositories and depository participants (DPs) in case investors sought to convert existing physical units of mutual funds schemes into a dematerialised form.
According to reports, a common online platform to buy and redeem mutual fund units offered by different fund houses, will be in place by March 2010. Initially, this would an order-entry platform and not a trading platform. But transactions would be much easier - much like investing in a stock.
A common online platform for trading funds will reduce the mutual fund industry's operational costs and help increase mutual fund penetration in smaller cities, where fund houses currently do not have enough distribution facilities.
Inflows into equity funds have declined in the past three months, weighed down by the capital-market regulator's decision to scrap entry load on mutual funds, which came into effect on 1 August 2009.
Asset management companies used to spend a major portion of the money they collected as entry load from investors to pay distributors' commission. With its scrapping, distributors have lost the incentive to sell funds.
India's mutual funds managed average assets of Rs 7,63,000 crore in October 2009.
MY COMMENTS -
No doubt that SEBI, the capital market regulator would have done ample workout before reaching to such a decision. Ironically as per the Mutual Fund reform's are concerned strange things & moves are happening from the regulator end.
I appreciate all of the efforts done by capital market regulator. But, are the Stock Brokers or Day Traders right choice for the selling, distribution & marketing Mutual Fund schemes! Will it really stop churning, miss-selling, honest & ethical financial planning? -DUE TO THESE REASONS. THE DRAFT & FINAL DECISION WHICH WAS MADE BY SEBI VIA THE CIRCULARS ON MUTUAL FUND REFORMS FOR AGENTS/DISTRIBUTORS/ADVISORS ISSUED TILL NOW. THIS WAS INCLUDED IN THE VERY STATEMENTS OF REGULATOR.
AMFI the Mutual Fund governing body which is the representative of Mutual Fund AMC's & the associated intermediaries said in a statement issued by Mr. Kurian that AMFI is already working on the model which would be a common platform for MF selling. And which would be out by March, 2010 approx.
But, SEBI highlighted this before hand in the news. That's good for mental preperation for Investor's. Every change is welcomed but timing of the change has to be seen. The move is quite impressive as far as the reach & depth of Mutual Funds is concerned.
As per the news Demat Account is required. But, how many demat accounts are lying frozen? How many people invest in Stock markets? Hardely 2% to 5% of entire Indian population.
How many retail investors are there in for Stock Market's? How many Stock Brokers are there in Rural India?
Most importantly, How many Indian's have PAN on the first place? Required for Mutual Fund investments, Stock Market Investments & most important Demat Accounts. Not more than 10% of Indian Population?
First, regulators & Finance Ministry should see into the matter of PAN first. The basic requirement for investments made by Finance Ministry itself. I believe first things should come first, shouldn't they?
These all questions have to be thought by SEBI, RBI & FINANCE MINISTRY. And some action is expected by them all.
