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Sebi allows non-demat MF transactions via stock exchanges

The move comes over one year after Sebi allowed MF distributors to use stock exchange infrastructure for mutual fund transactions through demat accounts in October 2013.

To help expand reach of mutual funds, regulator Sebi has allowed their distributors to use the stock exchange platform for non-demat transactions as well for sale or redemption of these financial products.

The move comes over one year after Sebi allowed MF distributors to use stock exchange infrastructure for mutual fund transactions through demat accounts in October 2013.

“… in order to broad base the reach of this platform, it is decided to permit non demat transactions also in the Mutual fund through stock exchange platform,” Sebi said in a circular.

MF distributors can use recognised stock exchanges’ infrastructure to purchase and redeem mutual fund units directly from Mutual Funds or Asset Management Companies on behalf of their clients.

As per the earlier Sebi guidelines, the MF distributors can not handle payout and pay in of funds as well as units on behalf of investor.

Sebi had also asked the stock exchanges to put necessary system in place to ensure that pay-in is directly received by recognised clearing corporation and payout is directly made to investor account.

Accordingly, the mutual fund units were supposed to be credited and debited directly from the demat account of investors.

Easing the norms, Sebi has now permitted even non-demat transactions in mutual funds through the stock exchange route. The move is aimed at allowing the mutual fund distributors to leverage the stock exchange platforms to expand their reach.

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