Capital markets regulator Securities and Exchange Board of India (Sebi) on Wednesday allowed investors to directly access the infrastructure of recognized stock exchanges to purchase and redeem mutual fund units directly from mutual fund and asset management companies.

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“This is expected to provide level playing field to exchange Mutual Fund distribution platforms vis a vis Mutual Fund utility,” said Ganesh Ram, Head, BSE StAR MF. Mutual fund distributors and other intermediaries also use NSE NMF II platform apart from BSE StAR MF for transactions.

Earlier in October 2013, Sebi had allowed mutual fund distributors to use stock exchanges for sale and purchase of mutual fund units and later in October 2016, registered investment advisors were also allowed by the regulator to use exchange platforms.

Industry participants believe that the move will increase flows into direct plans of mutual funds and help the industry penetrate into smaller cities.

A direct plan allows mutual fund investors to buy directly from the mutual fund company from their own website without any intermediaries such as advisor, broker or distributor. In direct plans, the investor is not required to pay commissions.

In a circular issued on Wednesday, SEBI said, “In order to further increase the reach of this platform, it been decided to allow investors to directly access infrastructure of the recognized stock exchanges to purchase and redeem mutual fund units directly from Mutual Fund/Asset Management Companies.”

The regulator also directed stock exchanges, clearing corporations and depositories to make necessary amendments to their existing bylaws, rules and regulations.

First Published:Feb 27, 2020 2:50 PM IST