Sebi allows direct sales of mutual funds on exchanges

MUMBAI: In a move that will increase access to direct schemes of mutual funds (MFs), Sebi has allowed investors to directly use the infrastructure of stock exchanges to purchase and redeem units directly from asset management companies (AMCs). Hitherto, investors who wanted to purchase direct schemes (without intermediary charges) had to go to the fund house or through a fintech platform like Paytm Money or Zerodha.
“While this move is in the direction of providing a level playing field to the exchanges, we will have to wait to see how this is implemented and plays out,” said Paytm Money MD & CEO Pravin Jadhav. “Dynamics of MF investing are changing fast with technology and, over the past months, we are already seeing investors switching even from AMC’s channels to us.” Paytm Money offers a platform for direct investment in MFs.
In 2013, Sebi had permitted MF distributors to use recognised stock exchanges’ infrastructure to purchase and redeem units directly from the fund or AMCs. Subsequently, in 2016, it allowed registered investment advisers to use the infrastructure of stock exchanges to purchase and redeem MFs directly.
Currently, fintech platforms — besides facilitating sales — also allow investors to compare performance of schemes and provide a host of information to users. It is not clear what kind of a platform the stock exchanges will build for direct MF distribution.
“The recognised stock exchanges, clearing corporations and depositories may make necessary amendments to their existing by-laws, rules and regulations wherever required,” Sebi said in a circular issued on Wednesday.