StAR Mutual Funds Platform
About Mutual Funds
In order to extend the convenience that investors in the secondary
market have, to investors in Mutual funds, a SEBI Committee under
the chairmanship of Mr. K N Vaidyanathan, ED - FII & MF consisting
of representatives from Exchanges, industry and depositories was set
up to consider the feasibility of allowing Stock Exchanges (SEs) to
offer their existing infrastructure for buying and selling of MF units,
in addition to the prevailing distributor / Independent Financial
Advisor route. The Committee appointed a sub-group consisting of representatives
from BSE Limited, National Stock Exchange (NSE) and two Mutual Funds
to map out the modalities. This culminated in SEBI issuing a on November 13, 2009 enabling this route and giving guidelines to all stake holders on the facility of collecting applications for Mutual Fund transactions through Stock Exchanges.
BSE's strength areas:
Asia's first stock exchange, BSE continues to bring trust and stability
to capital market in India. It has over 40,000 trading terminals connected
through 2918 Lease Lines and 1841 VSAT terminals which are spread
over 400 cities. BSE has a proven trading and settlement platform
assuring efficient on-time transactions and is a Self-Regulatory Organization
(SRO) ensuring transparency to all stakeholders. It has ISO certified
processes governing clearing and settlement, Information Technology
and Surveillance and offers seamless settlement processes supported
by state-of-the-art clearing and system. BSE has welcomed this industry
friendly and investor friendly initiative of SEBI and reiterates its
commitment to use its robust and time tested infrastructure to make
this convenience available to the mutual fund industry and stakeholders
Launch of BSE StAR MF:
MFI Model (For Member Brokers)
BSE launched its BSE StAR MF platform on December 4, 2009 in the presence
of Mr. C B Bhave, SEBI Chairman. The platform would be available from
9 a.m. to 3 p.m. on all working days of the exchange.
MFD Model (For ARN Holders/IFAs)
SEBI vide its circular CIR /MRD/DSA/32/2013 dated 4th October, 2013
has allowed Mutual Fund Distributors to use re-cognized stock exchanges'
infrastructure to purchase and redeem mutual fund units directly from
Mutual Fund/Assets Management Companies on behalf of their clients.
BSE Ltd offers its platform to Mutual Fund Distributors (MFDs) to
purchase and redeem mutual fund units on behalf of their clients.
For the aforesaid purpose, only a Mutual Fund Distributor registered
with Association of Mutual Funds in India (AMFI) and who has been
permitted by the concerned recognized stock exchange, shall be eligible
to use recognized stock exchanges' infrastructure to purchase and
redeem mutual fund units directly from Mutual Fund / Assets Management
Such MF Distributors shall not handle payout and pay in of funds
as well as units on behalf of investors. The pay in will be directly
received by Indian Clearing Corporation Ltd (ICCL) and payout will
be directly made to investor's account. In the same manner, units
shall be credited and debited directly from the demat account of
the investors by the ICCL.
BSE launched StAR MF platform for IFAs (MFD Model) on March 6, 2014
in the presence of Shri S Raman, Whole Time Member, SEBI and Shri
S V Murali Dhar Rao, Executive Director, SEBI.
BSE StAR MFTM is a browser based front end. Its architecture provides
scalable operation and flexible deployment options while ensuring
data integrity for improved performance. The system uses ASP.NET as
browser based front-end and RDBMS as the back end database.
The platform is feature-rich and highly flexible - it has link-ups
with both depositories CDSL and NSDL, facility for one-time registration
of client to avoid extra key strokes for repeated buy/sell requests,
detailed easy-to-use information on various schemes being offered
through the platform and report management features.
Advantages to investors/other stakeholders
of using BSE StAR MF:
BSE StAR MF is configured to accept both physical applications and
those in Demat form. Brokers of BSE who are registered ARN (AMFI
registration No.) holders are eligible to participate on this platform
as Mutual fund Intermediaries (MFIs). MFIs who enter applications
for investors who have chosen the Demat Option need not send any
physical documents to the RTA and will retain the applications in
their office along with all necessary annexures. However where investors
have opted for Physical Route, the MFIs would be required to send
the physical applications along with annexures to the nearest offices
of the RTA as per mutually agreed timelines.
Process-wise, on the first leg (collection of money for application
/units for redemption) the BSE and its Clearing Corporation - the
Indian clearing Corporation Limited (ICCL) will be responsible for
sending the same to the RTAs (registrar Transfer Agents). As far
as the reverse leg is concerned, i.e. sending units for purchases
and money for redemptions, to the investors, it will be handled
by the RTAs directly with the investors, thru physical account statements
or through depositories for Demat preference. The Exchange does
NOT offer any Settlement Guarantee as the respective AMC is the
counter-party for all transactions. However, the BSE would handle
the investor grievances, if any, related to the application process
(only MFI Model). Any grievance related to the units etc. would
have to be taken up by the investor with the RTA / respective AMC.
Pursuant to SEBI circular CIR/IMD/DF/17/2010 dated November 9, 2010,
the Exchange launched Phase 2 of the Mutual Funds i.e. the subscription
units / redemption proceeds will be routed through the BSE's Clearing
Corporation (ICCL) to the Brokers' Pool Accounts and then on to
the investors. This would be applicable to all transactions done
through the BSE StAR MF platform from the date of launch of Phase
2, i.e. from Friday, December 24, 2010 onwards.
The Exchange has since introduced the investor friendly Systematic
Investment Plan (SIP) facility (please see details in the Quick
Links Box) on December 10, 2010 and XSIP facility in July,2012 (please
see details in the Quick Links Box) which allows investors to invest
in Mutual Funds in small affordable instalments, in a regular, disciplined
and efficient manner.
What is a Mutual Fund?
- Independent view of customer's entire portfolio at one place
- Reduction of paperwork and ensuing errors
- Reduction of redundancy in process and data duplication at RTA
and Distributor levels
- De-risking MF settlement processes by using superior Delivery
v/s Payment (DVP) process provided by Stock Exchanges
- Efficiently & effectively address customer servicing issues
- Extending present convenience available to Secondary market
to mutual fund investors
- Enable transparency to customers
- Enable charging customers for service at the point where it
A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is then
invested in capital market instruments such as shares, debentures
and other securities. The income earned through these investments
and the capital appreciation realised are shared by its unit holders
in proportion to the number of units owned by them. Thus a Mutual
Fund is one of the most suitable investments for the common man as
it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. It is an ideal
tool for people who want to invest but don't want to be bothered with
deciphering the numbers and deciding whether the stock is a good buy
Who can invest in a Mutual Fund?
Anybody with an investible surplus of as little as a few hundred rupees
can invest in mutual funds. The investors buy units of a fund that
best suit their investment objectives and future needs. A Mutual Fund
invests the pool of money collected from the investors in a range
of securities after charging for the AMC fees.
How does a Mutual Fund appreciate your investment?
A mutual fund manager proceeds to buy a number of stocks from various
markets and industries. Depending on the amount you invest, you own
part of the overall fund. The beauty of mutual funds is that the investor
can reap returns as high as those of equity markets or have a steady
and comparatively secure investment as offered by debt instruments.
A Mutual Fund is thus, not an alternative investment option to stocks
and bond; rather it pools the money of several investors and invests
this in stocks, bonds, money market instruments and other types of
What are the advantages of investing in a Mutual Fund?
There are several benefits from investing in a Mutual Fund.
Mutual funds help you to reap the benefit of returns by a portfolio spread across a wide spectrum of companies with small investments. Such a spread would not have been possible without their assistance. Professional Fund Management: Professionals having considerable expertise, experience and resources manage the pool of money collected by a mutual fund. They analyze markets and the economy to select good investment opportunities.
An investor with a limited amount
of fund might be able to invest in only one or two stocks / bonds,
thus increasing his or her risk. However, a mutual fund will spread
its risk by investing in a number of sound stocks or bonds, across
sectors, so the risk is diversified, along with taking advantage of
the position it holds. Also in cases of liquidity crisis where stocks
are sold at a distress, mutual funds have the advantage of the redemption
option at the NAVs (Net Asset Values). Transparency and easy access
to information: Mutual Funds regularly provide investors with information
on the value of their investments. Mutual Funds also provide complete
portfolio disclosure of the investments made by various schemes and
also the proportion invested in each asset type and clearly layout
their investment strategy to the investor.
Closed ended funds have their units listed
at the stock exchange, thus they can be bought and sold at their market
value. Over and above this the units can be directly redeemed to the
Mutual Fund as and when they announce the repurchase.
The large amount of Mutual Funds offer the
investor a wide variety to choose from. An investor can pick up a
MF scheme depending upon his risk / return profile.
All the mutual funds are registered
with SEBI and they function within the provisions of strict regulation
designed to protect the interests of the investor.
What are the various types of Mutual Fund schemes?
Broadly, there are two types of schemes available:
Open Ended Schemes :
- Open-Ended Schemes
- Close- ended Schemes
Open-ended schemes usually do not have
a fixed maturity period and are available for subscription and redemption
on an ongoing basis. The units can be bought and sold any time during
the life of the scheme at NAV-related prices. Open-ended schemes can
issue and redeem units any time during the life of the scheme. (Note:
BSE StAR MF will accept all applications of those Open ended schemes
that are offered by the respective AMCs)
Close ended Schemes :
Close-ended schemes cannot
issue new units except in case of bonus or rights issue. Hence, the
number of units of an open-ended scheme can fluctuate on a daily basis
while that is not the case for close-ended schemes. Another way of
explaining this difference is that new investors can join the scheme
by directly applying to the mutual fund at applicable net asset value
related prices in case of open-ended schemes while that is not the
case in case of close-ended schemes, where new investors can buy the
units from secondary market only. (Note: Certain close ended schemes
of AMCS are presently available for trading on the BSE's BOLT (Equity