Sebi asks RTAs to build common platform for MFs

Mumbai: The capital markets regulator Sebi has asked registrars and transfer agents (RTAs) to develop a common industry-wide platform for purchase and sale of mutual funds (MFs) and to handle service requests.

"The interesting thing here is that RTAs will be involved in building this platform which has not happened earlier. This will help in standardization of the investment process and resolution of service issues. This could lead to operational ease and convenience for all stakeholders," said Neil Parag Parikh, Chairman and CEO, PPFAS MF.

As of now, CAMS and Karvy are managing the back-office data of all the AMCs. All AMCs have developed a transaction platform, known as MFU. NSE, BSE, and some Fintech are undertaking transactions in Mutual Funds.

"This will go a long way in making mutual fund processing easier from investor point of view as all service-related requirements can be met on a single platform and eventually this kind of investor servicing will also help increase popularity of mutual fund as a category," says G Pradeep Kumar, CEO, Union MF. What SEBI has done through the circular is to ensure inter-operability of RTA so that all kinds of non-financial transactions can be carried out smoothly by investors. Right now, what happens that if you go to CAMS platform, you can only do transactions with CAMS. Again, if you want to do transactions with Karvy then you need to go to that particular platform.

Now, there will be a single platform to do all kinds of non-financial transactions like getting annual statement or knowing the stage of bank mandate. "The inter-operable solution is conceptualized to go live in three distinct phases all of which are planned to go live by end of this calendar year. The first phase covers non-commercial transactions (service requests of investors), financial portfolio, CAS amongst other features even as phase two will see the launch of mobility platform. The last phase covers commercial transactions and integration with ecosystem partners for several value-added services," says Sreekanth Nadella, CEO, KFin Technologies.

Phase one is progressing at a brisk pace with a sizeable quantum of work completed. The platforms sustenance could come from marketing space for the participants, integration with eco system amongst others, he added.

"SEBI has authorized both CAMS and Karvy to design a transaction platform. There is a conflict of interest here. Now CAMs and Karvy are competitors to MFU, NSE and BSE whereas they have the sole custodian of back office data. What is there are back-office issues in the transactions executed through other platforms and Karvy and CAMs do not cooperate to sort it out or gives low priority over their own transactions," says Prakash Praharaj, founder, Max Secure Financial

Planners. Suggesting a solution for this, he said that MFU option is a better one than CAMS and Karvy.