The Securities and Exchange Board of India (SEBI) on Friday allowed mutual fund investors to transact all mutual fund schemes through the stock exchanges
“The need for enhancing the reach of mutual fund schemes to more towns and cities has been aired through various forums and channels. To address this issue, various models have been debated and discussed. The stock exchange mechanism would also extend the present convenience available to secondary market investors to mutual fund investors,” SEBI stated in a circular to all market participants, including asset management companies (AMCs), the Association of Mutual Funds in India (AMFI), stock exchanges and depositories.
The infrastructure that already exists for the secondary market transactions through the stock exchanges with its reach to over 1,500 towns and cities, through over two lakh stock exchange terminals “can be used for facilitating transactions in mutual fund schemes,” SEBI added
“Units of mutual fund schemes may be permitted to be transacted through registered stock brokers of recognised stock exchanges and such stock brokers will be eligible to be considered as official points of acceptance.”
SEBI also directed that the respective stock exchange would provide detailed operating guidelines to facilitate these transactions. The stock brokers intending to extend the transaction in mutual funds through the stock exchange mechanism shall be required to comply with the requirements regarding passing the AMFI certification examination. All such stock brokers would then be considered as empanelled distributors with mutual fund or the AMC.
In case investors desire to convert their existing physical units (represented by statement of account) into dematerialised form, mutual funds/AMCs were asked to take such steps in coordination with the Registrar and transfer agents, depositories and depository participants (DPs) to facilitate dematerialisation. “Stock exchanges and mutual funds/AMCs, based on the experience gained may further improve the mechanism in the interest of investors,” SEBI added.