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Tuesday, December 30, 2014

MF Utility gets green signal from SEBI

The first phase, which is meant for distributors, is expected to be launched in May 2015. 
 
The much awaited industry initiative MF Utility has received SEBI permission. The system which is currently in the testing phase is expected to be launched in six months. 

MF Utility will be launched in two phases – first phase for distributors and the second for investors. 

So far, 25 AMCs and 2,400 distributors from close to 400 locations (including 280 corporate distributors) have signed up with MF Utility. 

Fund houses have contributed Rs. 5 lakh as capital in this company. Distributors can access this system free of cost. AMCs will pay on the basis of number of transactions. AMCs may have to cough up anywhere around Rs. 18-20 per transaction.  

“This is an order routing system which will reduce duplication of data entry at various points. It will minimize data entry errors. The system can handle 25,000 users concurrently,” said V Ramesh, Managing Director & Chief Executive Officer, MF Utilities India. 

Ramesh said that this system will not compete with any of the existing platforms. “It’s just an order routing platform. We’ll funnel all the transactions and submit them to R&Ts. It will be of great help to distributors where there are no R&T offices. It will save their time, effort and money. Distributors can just scan and send the documents to R&T which will help investors get the same day’s NAV. The physical documents can be sent later. Moreover, now all the R&Ts will be AMC neutral, which means that Karvy can accept HDFC applications even if HDFC MF’s R&T is not Karvy. Distributors can send documents through courier to any of the nearest R&T.” 

One of the most useful features of this system is that investors can invest through a single cheque if they wish to invest in multiple funds. Distributors can execute all kinds of transactions like SIP, STP, lump sum investment, redemption, etc. on this system. 

MF Utility will operate as a registrar to an issue (RTI) and will be regulated by SEBI. 
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