Trading in mutual funds in a fortnight

You may soon be able to buy and sell mutual fund units through your broker’s terminal, according to the chairman of the Securities and Exchange Board of India. “Trading in mutual fund units is expected to start in 10 to 15 days,” he said in an interview with CNBC Awaaz. Brokers have applied for the necessary certifications and expect to be battle-ready anytime soon.

“The buying of mutual funds would be like any other equity shares transaction on T+1 settlement (one day after the trade has taken place) through exchanges,” said Mayank Shah, CEO of Anagram Capital. Brokerages are signing up with  various asset management companies and exchanges for trading through  terminals.

“It would not be a problem for us. Not many changes would be required in our system and dealing in MFs would be like any other equity product. This would reduce paperwork and units would be in demat form,” said Dinesh Thakkar, CMD of Angel Broking.

Sebi had issued a circular on November 13, which allowed the use of stock exchange infrastructure for sale of mutual funds. It is expected that this would increase the reach of the  mutual fund industry, which is dealing with increased difficulties in distribution following the ban on charging of entry loads.

As well as increasing penetration among retail investors who currently do not invest in mutual funds, investors who have exposure to mutual funds may take the demat route, feels Nitin Rakesh, CEO at Motilal Oswal AMC. “There could be a migration period lasting a few months. HNIs already have demat accounts and the number of retail investors with such accounts should also increase soon”.

“Anything that spreads the availability of the product would be welcome, and the entire process should begin soon,” said Suresh Soni, CEO of Deutsche Asset Management (India).