MF trading platform to kick off today

Investors can buy and sell mutual fund units through their demat account like the way they buy and sell shares of listed companies, said dealer. The BSE is also likely to set up the trading platform soon.

The idea behind setting up a mutual fund trading platform on the stock exchange is to spread equity cult across the country. Many new investors are using the MF route to invest in the stock market. Mutual funds with assets in excess of Rs 7 lakh crore have become a major force in the market, said a market expert.

The Sebi recently gave its approval for facilitating transactions in MF schemes through stock exchange infrastructure. The infrastructure that already exists for the secondary market transactions through the stock exchanges with its reach to 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 had said.

According to the Sebi,the stock exchange mechanism would also extend the present convenience available to secondary market investors to mutual fund investors. Mutual funds have also set up investor service centres across the country.

In order to compensate distributors (after abolishing the entry load),the Sebi has asked mutual funds to use the exit load proceeds diligently. Of the exit load charged to the investors,a maximum of 1 of the redemption proceeds shall be maintained in a separate account which can be used by the AMC to pay commissions to the distributor and to take care of other marketing and selling expenses, the Sebi had said.