Mutual Fund Trading In Nse
 
  

 

SHARETIPSINFO >>Research Reports >> NSE STARTS MUTUAL FUNDS TRADING

Now the buying and selling of mutual fund have become easier as investors can transact through their NSE brokers. Investors can place subscription and redemption order online.
Initially it will trade only 30 schemes of UTI Mutual Fund. Later other Mutual funds are expected to join in few days.


Some of the UTI scheme that is to be traded are UTI Mastershare, UTI MNC Fund, UTI MIS Advantage Plan, UTI Masterplus, UTI Opportunities Fund, UTI Short Term Income Fund, UTI Equity Fund, UTI Wealth Builder Fund, UTI Contra Fund, and UTI Banking Sector Fund.


20 brokers are expected to provide trading in Mutual Fund to their clients.


PROCESS
Investors can connect to the NSE’s trading platform through brokers’ telecom network. A fully automated online order collection system called National Exchange Automated Trading-Mutual Fund Service System (MFSS) will be provided to the participants (brokers).
The settlement of the units will be through the depository in the demat mode for the demat holders whose designated bank account will be debited/ credited for the order placed on T (trading day) + 1 day.
The new MFSS will operate on all business days of the capital market segment between 9 a.m. and 3 p.m.
The value of single transaction according to NSE should be less than 1 crore.


ADVANTAGE OF TRADING ON NSE
NSE has more than 1.5 lakh terminals across 1500 cities in India. The arrangement with NSE will help in faster settlement of transaction and provide single window to demat holders for their investment.
Investors will also have the added advantages of getting the NAV same day. Unit holder will also have the option of getting their unit allotted in the demat account.
With the introduction of trading on NSE there will be level playing field for distributors and brokers. Banks will be able to get their client invested in the mutual fund at the click of the button.
Now the Mutual Fund advisor can offer advisory service over the phone. Transaction can take place like ‘call and trade’ offered by many stock brokers. This will increase the overall efficiency for both advisors and clients and save both time and cost per transaction.


COST OF TRADING ON NSE
Trading in mutual fund would come at cost, investor would have to pay the brokerage fees to the broker and also to the exchange and NSDL they levy. Such charges are mitigated by the abolition of entry load.
Mutual Fund intermediaries’ stands to gain after the loss from the entry load abolition. The gains would be big for the member of NSE who is also distributing the mutual funds.
The brokerage charges are expected to hover in the range of 0.5-1%.


NO SPECULATION
The trading in MF on NSE won’t be like trading in the stock market where trader speculate buy and sell on intraday basis. In this case it is more like applying for an IPO online. There is going to be no trading only submissions of application form online. 
The unit purchase or sale would be determined by the NAV of the day concerned. The capital adequacy of the broker won’t be impacted.

CONCLUSION
We expect to pick up in the coming days as more and more MF units get it listed. The transparency and the speed with which transaction gets executed will attract more and more client.
As things are now fully automated higher volume can be seen as the capability of machine is unlimited.
The reach of NSE is far and wide so we can see higher MF penetration. Some of the dedicated clients who only trade in stocks will also get attracted to MF units and will occasionally invest in it.

 

 

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