Mutual Fund Service System (MFSS) is an online order collection platform (note: not live trading of mutual funds) for placing subscription and redemption orders in mutual funds based on instructions received from investors.
This system has been implemented by both stock exchanges — National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE).
MFSS Eligibility Criteria for Investors:
- An investor must have a trading account and depository (demat) account with a registered broker.
- The investor must sign the relevant MFSS agreements.
Investors already having a demat account:
They will need to sign additional MFSS terms and conditions to activate this facility along with their existing equity account.
This is how the system works:
- Investors can buy or sell mutual funds using MFSS, similar to the process of buying or selling shares.
- MFSS operates between 9:00 a.m. and 3:00 p.m. on all exchange working days.
- All settlements take place on T+1 basis (Trade Date + 1 working day).
- An order confirmation slip is issued by the broker, which serves as conclusive proof of the transaction.
Fund Flow Mechanism:
- For subscriptions, the pay-in of funds is made through the broker’s clearing bank account.
- For redemptions, pay-out of funds is directly credited by the Registrar & Transfer Agent (RTA) to the investor through modes such as direct credit, NEFT, or cheque, as determined by the AMC from time to time, based on bank details registered with the RTA.
As of now, SIP / STP / SWP facilities are not available under MFSS.
(The implementation mechanism for these remains to be seen.)
Please note that all other scheme features mentioned in the Key Information Memorandum (KIM) remain unchanged.
Conversion of Existing Mutual Fund Units into Demat:
The following steps are required:
- Obtain a Conversion Request Form (CRF) from your broker, fill it, and submit it along with the latest Statement of Account showing mutual fund holdings.
- Ensure that the name and holding pattern exactly match those in the Statement of Account.
- Separate CRFs may be required for each folio, free units, and locked-in units.
- Confirm with your broker (or refer to the eligible scheme list) that the mutual fund units are eligible for demat holding and that an ISIN has been allotted.
- The broker may charge a nominal fee for converting mutual fund units into demat form.
Advantages of MFSS:
Convenience — All equity-related assets are held in one place, making it easier to monitor holdings and transact.
Disadvantages of MFSS:
Costs — Brokerage charges may apply when buying or selling mutual funds through demat mode.
Currently, there are no entry or exit loads on equity mutual funds, but brokerage policies may vary. (Please confirm with your broker — many brokers initially offered MFSS transactions free of cost for a limited period.)
Funds Eligible under MFSS:
Schemes of the following Asset Management Companies (AMCs) are eligible under MFSS.
(Refer to the latest NSE circular for updated eligibility.)
- 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.
MFSS is an exchange-based mutual fund order platform that allows investors to buy and redeem mutual funds through their demat and trading accounts.
Disclaimer
This content is provided for educational and informational purposes only and should not be construed as investment advice, research, or a recommendation to buy or sell any securities.
Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully.
