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All Mutual Funds Schemes will now be listed in Stock Exchange

Sebi wants listing of all mutual fund schemes. Securities and Exchange Board of India (Sebi) is planning to make listing of all schemes mandatory. These will include all debt, equity, open-ended and close-ended schemes.
The aim of this to now transacting in mutual funds in any scheme will be as easy as investing in shares or stocks.

According to Sebi officials, the basic reason for listing all mutual funds is to give investors another option. Also, costs will come down further.

However, Sebi’s decision has been delayed by a few problems. For one, there are over 2,000 schemes in the market. Then, there are listing costs. When listing of fixed-maturity plans (FMPs) was made mandatory last year, cost was an issue.

At present, the cost of listing FMPs depends on assets under management. The cost is Rs 16,000 for funds that have AUM up to Rs 100 crore, for the first six months. The cost of listing exchange-traded funds is the same. “The listing cost of schemes may be too high, especially for smaller fund houses. It should not be a big deal for large players,” said a source.

Trading of mutual funds at the exchanges has not really taken off. Monthly volumes on the BSE, the bigger player in this segment, rose from Rs 18.80 crore to Rs 78.85 crore in July. The reason: settlements take place directly between fund house and investor. That is, units of a mutual fund are deposited directly into the demat account of an investor.

When trading through the exchanges, things are different. In comparison, in the case of stock trading, the broker takes delivery of shares.

So, if the cheque of a mutual fund investor bounces, the broker may have to chase an investor. “It is this lack of control at the broker’s end that does not encourage them to aggressively promote mutual fund trading. We are looking at a process whereby units can be delivered through brokers,” said an exchange official.

Source: Business standard

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