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10 Jan 2012 09:00 AM
AMFI shortlists 9 players to develop MF Utility  
Ravi Samalad
 

Concerns remain on operational costs of running the day-to-day operations of this platform

Mumbai: AMFI has shortlisted nine companies for developing MF Utility platform. AMFI has sent Request for Proposal (RFP) to these nine shortlisted players. The bidders are likely to revert to AMFI with their detailed plans by the end of January.

Some bidders had told Cafemutual that it would be difficult to design a fully functional platform in the 3-month deadline set by AMFI. However, AMFI is yet to decide on whether it would consider extending the deadline.

Some industry officials are of the view that AMCs may not want to make a huge investment in something which is not their core function. The challenge is not only to develop it but also run it. Running the day-to-day operations of a system like MF Utility may even increase the headcount, and thus,costs for AMFI which is funded by AMCs.

One view point is that the MF Utility should be run as a commercial venture rather than as a not-for-profit unit. Their argument is that a not-for-profit venture will not assure the best services to investors. AMFI plans to charge a transaction cost for executing orders to fund its operational expenses. The MF Utility committee wants the venture to operate a no profit no loss basis. Their idea is to provide this platform as a value add-on to pull in more investors into MF fold and streamline the investment process by eliminating time, cost and money involved in physical investing. AMFI may also explore to appoint DPs as point of service for MF Utility. The MF Utility will be owned by AMFI.

The MF Utility will provide order routing and payment mechanisms having connectivity to RTAs, AMCs, stock exchanges, DPs, banks, centralized KYC repository, etc.

 
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