Very soon, investors will be able to invest in mutual funds directly through the stock exchanges on their own and without the assistance of their distributors or Registered Investment Advisors .
The Securities and Exchange Board of India has asked stock exchanges to allow investors to buy and sell mutual funds directly on their platforms.
With this move, the regulator has now ensured a level-playing field with the mutual fund industry’s own official platform, Mutual Funds Utility, which was launched by mutual funds through the Association of Mutual Funds of India in 2015.
As a result, investors who wish to invest in mutual funds on their own through direct plans, can make use of MFU directly. The stock exchange platforms- BSE STAR MF and NMF II – also offered direct plans. But there was a small limitation – direct plans on stock exchanges were available only to those investors who invest in mutual funds through SEBI-registered RIAs.
Just like how investors invest in MFs through distributors on exchanges, the RIAs would initiate a transaction. The investors would then get a weblink on their email which they have to click on, make their payment and complete the transaction.
SEBI’s latest move now allows investors to come to exchanges directly, just as they could go to the MFU entirely on their own.
“This is expected to provide a level-playing field to exchange MF distribution platforms vis-a-vis MF utility,” experts said .
CAMS – one of the largest registrar and transfer agents of the MF industry – also allows investors to invest in MFs without the use of any intermediary, distributor or RIA.
There are already platforms such as Zerodha, Groww and many others that allow investors to invest in MFs through direct plans at zero fee.