So far, only investors having a demat account were able to buy and sell mutual funds through the stock exchange platforms of BSE and NSE.
In a bid to expand the reach of stock exchange mutual fund platforms, SEBI has permitted exchanges to accept non-demat transactions from investors.
“Now brokers can scan and send us documents just like the way FundsIndia and Prudent operate. We had made representations to SEBI about this,” said an official from BSE.
Stock exchanges had approached SEBI to also allow investors who don’t have demat accounts to transact via the stock exchange platform. This was a major hurdle for exchanges in expanding the reach of mutual funds. Now, investors don’t have to incur the costs associated with maintaining a demat account.
After the entry loads were abolished, SEBI nudged stock exchanges to create a mutual fund platform with a hope that the distributors would find it a cost effective and convenient way to carry out mutual fund transactions. SEBI has recently permitted exchanges to give limited membership to distributors to use stock exchange platform at a marginal fee.
Hence, BSE launched its StAR MF Platform in 2009. NSE too launched its NSE Mutual Fund Service System (MFSS) around the same time.
