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Does SEBI’s proposed common MF platform make investing simpler for retail investors?

The platform will be digital. All or most of your queries would get resolved without the need for carrying documents physically to your fund house’s branches

August 03, 2021 / 09:54 AM IST

Last week, SEBI came out with a circular asking mutual funds (MFs) to launch an inter-operable platform. Picture this: you have just moved to a new address. You have investments across 10 MF schemes. Or say, you want to change your nomination in your existing MF investments.

At present, you have to approach entities individually, as different fund houses would have different processes. Or, you could go to CAMS (Computer Age Management Services) and KFinTech, two of MF industry’s largest registrar & transfer agents (RTA).

The new common platform is expected to help immensely on such matters, as you would need to approach just one common point for all your service needs. As an MF investor, here are three ways in which the new platform would help you.

Single-point resolutions

For all kind of non-commercial updates (service requests), you will have to make your desired change just once. To begin with, there will around 18 different non-commercial transactions you can access and roughly 50-60 percent of those will get resolved in real time. For some complex queries and requests, there may be some time lag and back and forth with the asset manager.

Close

Some of the most complex matters such as transmission of assets may still require direct contact with the asset manager.

Commercial transactions across asset managers, too, can be enabled in a single transaction.

To be fair, some of this convenience already exists. The AMFI promoted MF Utilities online platform offers just this – a single-point resolution for commercial and non-commercial transactions across asset managers, for mutual fund investors and distributors. Other online providers such as BSE’s Star MF and NSE’s Mutual Fund Platform also have wide-ranging facilities for single-point resolution, but mainly commercial transactions.

According to Ganesh Ram, MD &CEO, MF Utilities, “An RTA inter-operable platform is a positive move from the regulator, which will benefit investors if implemented seamlessly by fixing existing gaps, data availability and streamlining the current processes. It is worth noting that the MFU already has an operational platform covering 95 percent of all services, including NFTs/complaints mentioned in the circular. Once RTAs extend APIs for the remaining 5 percent, it will make MFU a complete platform.”

In the first phase, the proposed new platform will only be accessible to investors directly and then subsequently it will be opened to distributors and advisors. If you currently invest via any digital platform or through a distributor/advisor, you needn’t change anything. You can get registered on this new platform if you wish to. Your existing mode of transaction can co-exist with your account on this new platform.

The advantage of registering will be the integrated, single-point and real-time transaction access across asset managers.

Standardised formats

Neither you nor your distributor will any longer need to worry about different formats and processes across asset managers. You only need to familiarize yourself with the process published on this platform for any commercial or non-commercial transaction.

In order for integrated transactions to be facilitated across asset managers, there is a need to standardize procedures. For example, each asset manager needs to have the same process of updating of nominee details or for unclaimed dividend repatriation and so on. At present, procedures across asset managers, especially for non- commercial transactions are not uniform and standardized.

Sreekanth Nadella, CEO, KFinTech, says, “With investors at the core, standardizing disparate processes was the starting point for the platform’s creation. The team has been working with AMCs to rationalize and standardize the same. With requisite consensus, the resultant processes are built into the platform. There may be minor differences owing to varying risk management practices that different organisations adopt.”

Standard procedures are the need of the hour in the mutual fund industry when it comes to non-commercial transactions. If the presence of this platform is a pre-cursor to standardized processes, it can greatly benefit investors and distributors/advisors.

Get your queries resolved without leaving your home

The platform will be digital. In other words, all or most of your queries would get resolved without the need to carry documents physically to your fund house’s branches. Once distributors and advisors are allowed to access this platform, all they need to do is to activate a service request link. They can then log into your account and complete feeding the query in the system.

In the first phase of the launch, non-commercial transactions will be tackled and subsequently commercial transactions will get covered.

Will my investments via digital platforms get affected?

Certainly not. But SEBI has envisaged this platform to be connected with all fund houses and RTAs. SEBI has also allowed this platform to be connected to other existing platforms, distributors, advisors, stock exchange platforms, digital platforms and so on. As far as buying and selling MFs is concerned, this platform won’t make much of a difference if you’re already using another platform such as BSE MF Star or MFU. But as far as after-sales service goes, this common platform will help. Nadella says, “The scope of solutions and services of the MFCentral (that’s the name of this new platform) are unique, complementary and value enhancing for investors and distributors. As such, there is little to no duplication of services offered by other platforms. It offers near real time resolution, as against just logging in the service requests. We believe it will facilitate greater innovation in the future.”
Lisa Barbora is a freelance writer. Views are personal.
first published: Aug 3, 2021 09:54 am

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