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Mutual Funds

A Mutual Fund Trading Platform

ET: Mutual Fund trading platform takes shape

The Association of Mutual Funds in India (Amfi) has shortlisted four entities to develop a common electronic platform that will allow asset managers, investors and distributors to trade, switch over and compare schemes online through a single window.

The Amfi is likely to zero in on one entity within two weeks, following which the plan will be presented to market regulator Securities and Exchanges of India (Sebi) for final approval. Amfi intends to implement the platform by March 2010.

The need for a shared online platform for the local MF industry, a concept that has been borrowed from the developed markets, has strengthened, especially after Sebi recently scrapped the entry-load system and imposed restrictions on the industry, while doling out commissions to brokers.

SEBI bans entry loads, and suddenly they all get together to build technology that supports easy trading. This is great stuff; the ability to do this online will dramatically decrease cost of acquisition and transactions. MF agents are in trouble though – most will choose to become insurance advisors. After all, Insurance Advisors seem to keep 40-50% commissions on their client ULIP buys – IRDA, are you listening?

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