Tag - dematerialization

August 2010

What is Mutual Fund Service System (MFSS)

Mutual Fund Service System (MFSS) is a new online order collection system (to be noted, not live trading of MF….) for placing subscription or redemption orders on the Mutual funds based on orders received from the investors.  This has been implemented by the both Exchanges, NSE and BSE.

MFSS Eligibility criteria for Investors:

One should have a Depository and Trading account with a Broker and should also sign the relevant  agreements for MFSS.

Investors already having a Demat account :  Will have to sign additional terms and conditions for MFSS in order to activate this facility in addition to the existing equity account.

This is how the system works:

You can buy or sell Mutual Funds using the MFSS system (the same way in which you buy or sell shares). MFSS is available between 9.00 am and 3.00 pm on all the working days of the Exchange.  All are  settlement happens on T+1 (working days). (Trade Date + 1 working day)

An order confirmation slip is sent to the investor by the Broker and is the conclusive evidence of the transaction.

The pay-in of funds for subscription shall be through the Broker’s Clearing Bank Account but Pay-out of funds (redemption proceeds) will be directly sent by RTA to investors through appropriate payment mode such as direct credit, NEFT or cheque as decided by AMC from time to time, as per the bank account details recorded with the RTA.

As of now, SIP/STP/SWP is not available in MFSS. ( I am not sure how this can be implemented… Will have to wait and watch)

Please note that all other scheme characteristics mentioned in the KIM remain the same.

Conversion of Existing Mutual Funds into Demat :

The following needs to be done

1. You need to Collect Conversion Request Form(CRF) from your broker, duly fill it up and submit along with latest Statement of Account evidencing the holding of MF units.

2. You need to Ensure name and pattern of holding of your account are same as in the Statement of Account.

3. You might be required to use separate CRF is required for each folio number, free units and for locked-in units

4. You need to Ensure from your broker (or you can refer to the list below)  that the MF units submitted for conversion is eligible to be held in demat and ISIN is allotted.

5. Your Broker might charge you a minimal amount to get the Mutual fund units converted into demat.

Advantages of MFSS : Convenience !!!!!! All equity related assets are in one place. It is easier monitor. Easy to transact.

Disadvantages of MFSS : Costs !!!!!! Brokerage Costs may be involved when buying or selling mutual funds through demat.  At present there are no entry and exit loads on equity mutual funds. (Please talk to your broker for more information,  most of the brokers are offering free transactions costs for couple of months )

Funds List of Schemes of following AMCs are eligible in MFSS. Please find the attached excel file containing the eligible scheme list of various Asset Management Companies (AMCs).

List of Eligible scheme for MFSS (Refer latest NSE Circular for updated list)
AIG Global Asset Management Company (India) Private Limited
Benchmark Asset Management Company Private Limited
Birla Sun Life Asset Management Company Limited
DSP Blackrock Investment Managers Private Limited
FIL Fund Management Pvt. Ltd.
Franklin Templeton Asset Management India Pvt Ltd.
HDFC Asset Management Company Ltd
ICICI Prudential Asset Management Company
IDFC Asset Management Company Ltd.
JP Morgan Asset Management India Private Limited
Kotak Mahindra Asset Management Company Ltd.
Morgan Stanley Investment Management Private Ltd.
Principal PNB Asset Management Company Pvt. Ltd.
Quantum Asset Management Company Pvt. Ltd.
Reliance Capital Asset Management Ltd.
Religare Asset Management Company Ltd.
SBI Funds Management Pvt. Ltd.
Sundaram BNP Paribas Asset Management Company Limited
Tata Asset Management Ltd.
UTI Asset Management Company Ltd.