SEBI permits brokers to trade in MFs
14 Nov 2009
In a move that could considerably widen the distribution network for mutual funds, Securities and Exchange Board of India (SEBI) on Friday allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism.
''The infrastructure that already exists for the secondary market transaction through the stock exchanges with its reach over 1,500 towns and cities, through over two lakh stock exchange terminals can be used for facilitating transactions in mutual fund schemes,'' the SEBI circular said.
The move is aimed at providing mutual fund investors more options to buy or sell units of mutual fund schemes. Stockbrokers will be eligible to be considered as official points of acceptance, the circular said. These stockbrokers need to pass AMFI's (Association of Mutual Funds in India) certification examination, and become empanelled distributors.
Every mutual fund has to disclose the locations of its official points of acceptance in its offer documents and Web sites.
Selling through the stock exchange mechanism basically means an additional order routing system for buying or selling mutual fund schemes; there is no price discovery, said a senior official at a transfer agent's office.
End-users can use the convenience of their neighbouring broker's office for their mutual fund transactions, said Mayank Shah, chief executive officer of Anagram Stock Broking, told Moneycontrol.
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