MF Utility, Amfi’s centralised distribution platform for mutual fund investment, has begun enrolling distributors and is awaiting a final nod from Sebi to become operational.
Close to 550 distributors from 140 cities have signed up for the platform, according to V Ramesh, MD & CEO, MF Utilities India. As many as 25 AMCs have signed up for the platform and Ramesh is hopeful that others will follow suit. ?The back-testing is complete, we are just waiting for market regulator Sebi to give the final clearance. Once that is done, there will be a soft launch, following which the platform will be thrown open to investors,? said Ramesh.
Mutual fund houses are expected to pay Rs 5 lakh as initial capital for the MF Utility platform. In addition, they will have to shell out money based on the number of transactions routed through the platform. This could mean that the bigger fund houses will have to pay more than the smaller ones to use the platform.
The centralised infrastructure will help fund houses save on transaction costs and provide a one-point platform for investors to connect to fund houses, according to experts.
A single account number will be created, which can be used to invest across MF schemes of all fund houses. This will save time used on paperwork. Also, a single login will do away with the need of separate login ids and passwords for different fund houses. With single-cheque payment for multiple transactions, the platform will do away with the need to issue separate cheques for separate schemes.
Distributors will benefit as they can upload their transactions on a single platform; thus, doing away with the need to hand in applications separately to the registrar and transfer agents. Experts said the platform will make all investor data available in a standard format. At present, even basic investor information such as name, address and PAN are not shared in a standard format by R&T agents, they said.
There are concerns, however. Under the new system, all fund houses will have to upload client and distributor details on the utility platform and this has raised concerns over data confidentiality among some industry participants. Also, distributors fear the ‘direct option’ provided to investors via the online platform, coupled with the ease of transaction, could further fuel the migration to direct plans among retail investors and high net-worth individuals, leading to loss of distributor commissions.
Direct plans contributed 34% of the industry’s AUM (excluding fund of funds) for the three months ended June 2014.
In June last year, Polaris Financial Technology was chosen to develop the platform, envisaged as a one-stop investment solution to mutual fund investors. In 2012, Amfi had reportedly shortlisted as many as nine vendors to develop the software for the platform. The MF Utility platform has run into considerable delays. Amfi had earlier planned an April 2012 launch and, later, postponed it to April 2013.
