AMFI's mutual fund trading platform gets Sebi nod

Stocks regulator Securities and Exchange Board of India (Sebi) has approved a one-stop mutual fund trading platform proposal of trade body Association of Mutual Funds in India (AMFI). The platform will go on live during the first half of 2013.

“Sebi has recently approved the MF Utility platform proposal sent by AMFI. We will be able to launch it sometime between April and June next year,” said V Ramesh, deputy chief executive of AMFI, while speaking at the fourth Mutual Fund Round Table (MFRT) conference here.

The platform will provide one-stop investment solution to existing and new customers, such as buying different schemes of different fund house at one go and easy switching of funds etc with one account number.

“Like people trade in shares by opening one demat account, in MF Utility, people can subscribe to any number of schemes of any number of AMCs (Asset Management Companies, or fund houses) by having a Common Account Number (CAN),” added Ramesh.

AMFI has so far shortlisted nine IT vendors to develop the software for it. However, Ramesh did not elaborate the details.

Mutual fund companies are finding it hard to sell their products amid a dicey stock market as distributing agents have shown little interest in the product marketing due to ban of entry load- the amount deducted at the time of scheme buying, which has been in force since past three years. The new trading platform, which is exclusively meant for mutual funds, is aimed at minimizing dependence on distributors even as analysts say investors would be deprived of distributor advisory if they trade online.

But AMFI officials said that the objective of the platform is not to cut dependencies on distributors.

“The trading platform would provide all the details right from transaction to account statement and other necessary information at one click. But this platform is meant for informed investors. We still need to depend upon distributors to expand our business,” he said.

The fund houses are eyeing smaller cities and pension funds these days to expand their business after the entry load ban affected new business generation. They have also demanded that Sebi should allow a rise in expense ratio--the amount dedicated every year towards operating expenses of a fund--to meet the extra cost that would be incurred in expanding bases.