The Indian Mutual fund industry is undergoing major revolutionary changes to make it efficient, transparent and investor-friendly. After the abolition of entry load on the purchase of Units from Mutual Fund Houses, Sebi has taken another bold step in introduced Online Trading in open-ended mutual fund through the National Stock Exchange (NSE) and Bombay Stock Exchange.

The National Stock Exchange NSE on 30th November 2009, Monday opened its online trading platform for mutual funds with the Initial tie up with UTI Asset Management Company (AMC). Mutual Fund investors will be able to transact through National Stock Exchange’s fully automated online system in mutual funds along with other capital market products.

Within less than a week after the National Stock Exchange launched its mutual funds trading platform, the Bombay Stock Exchange, on 04th December 2009, Friday made operational its own mutual fund platform name BSE Star with confirmation of participation from more than 20 mutual fund-houses with a total of 103 schemes.

The New System

Investors henceforth with the new system can connect to the NSE’s trading platform through their brokers’ for subscription and redemption of Mutual Fund Investment. NSE had provided a fully automated online order collection system called National Exchange Automated Trading-Mutual Fund Service System (MFSS) for the participants while BSE had provided the services in the name of BSE Star.

The Number of units bought / sold will be through the depository in the demat mode for the demat account holders whose designated bank account will be debited/credited for the order placed on T (trading day) + 1 day. The Process is the same as in case of Purchase of Shares from your broking house. The new system will operate on all business days of the capital market between 9 a.m. and 3 p.m. with a cop of single transaction less than 1 crore.

In case an order is placed through the physical mode, the Registrar and Transfer Agent (RTA) will provide final redemption information to the exchange on T+1 day; the payout, however, will happen according to the scheme’s provisions and within the timelines.

Benefits to the Investors

Investors henceforth can place the order for subscription and redemption online through their demat account as they currently do while trading in the secondary market for equities. Investors not having demat account can place orders in the physical mode through an AMFI certified broker by providing specific KYC documents.

The move by SEBI had now allowed investors in the mutual fund industry to transact through 2 lakh terminals of NSE located across 1,500 towns and cities. The extensive reach and access to NSE & BSE terminals across all regions will further bridge the gap between the Mutual Fund Industry and the people from the remotest part of our country desirous of investing in mutual funds. This move will boost the Rs 7.23 trillion Indian Mutual Fund industry to a different platform.

In the earlier offline mode of transaction investors were able to buy the units of the Mutual Fund on the same-day NAV, if they submit their form to the Mutual Fund House before 3 pm, which is the cut-off time for equity fund. Any delay in submission of the form results in the investment at the next day’s NAV. With the new system in place, the Investor can now plan their purchase online till 2.59 PM at the comfort of the home.

The Online system apart from allowing investors to purchase mutual funds units at the same days on the same day NAV, provides the added advantage of getting their units allotted in demat mode. This also facilitates easy monitoring of the Mutual Fund Investment along with other investments.

Single Demat account for all

Investors do not have to open a new account for dealing with Mutual Fund. The investment in Mutual Fund can be done with existing demat account. Investors will get a single demat statement that will reflect all their holding in Share market and mutual fund thus giving greater control on the Portfolio.

Present Facilities Available to Investors

Presently the new system is supporting only the one time lump some Investment in the mutual fund scheme restricted to a single transaction of less than 1 crore. The Systematic investment plan (SIP) and systematic transfer plan (STP) is not offered to the investor but is expected to be provided in near future

Investment Cost

The broker will charge investors a certain amount as brokerage. The brokerage will vary from broker to broker and is a concern to be addressed for the benefit of the Investors.

Learning the Strategy to Invest in SIMT way

Our purpose here at Shyam Institute of Management and Technology is to offer dependable resources and expertise for enhancing trading knowledge about the Indian stock market. Through the software, traders and investors can also learn about various financial instruments and as to how they can use them without risking any of their hard-earned money. Moreover, with direct feeds available from NSE, MCX and NCDEX, we offer them an experience which is not only valuable but also allows them to gauge their readiness before taking a leap into real time trading. Mock Trading in Mutual Fund and Commodity Market is also available for the user. Thus the Investor can plan the right Investment portfolio including investment in share, commodity and Mutual Fund segment

For Registration for the Mock Trading Game from Shyam Institute of Management & Technology, Please visit http://www.simt-ind.org/eshopping.php?catid=2