BSE Star MF has introduced an overnight liquid fund product for distributors. The facility enables distributors to settle liquid fund units on the same day, just like intraday trading on stock exchange platforms. Also, there will be no additional cost like security transaction tax and brokerage to execute such transactions as it would be traded on non-demat account. Earlier, such a facility was only available in the offline mode.
Distributors can place an order request to buy units of liquid funds on behalf of their clients till 1 pm to get historical NAV and sell it before 3 pm on the same day to earn one day’s interest. For instance, if an investor invests Rs.1 lakh in a liquid fund delivering CAGR of 9%, she can earn Rs. 25 in a day by executing overnight transaction through the platform.
Currently, liquid fund investors of on this platform get delivery of units in their demat account by 4 pm. As a result, they cannot get the benefit of overnight trading since the cut off time is 3 pm. Since SEBI has allowed such platforms to accept non-demat transactions, investors need not wait for such deliveries to place sell orders.
Typically, institutional investors like corporates and HNIs carry out such transactions through offline mode. However, they are required to have a folio with the respective fund house and do a lot of documentation. This facility aims to help investors by reducing turnaround time and providing ease of transaction.
Currently, 12 AMCs have signed up with the Star MF Platform. Initially, the platform has allowed distributors to invest in the liquid schemes of Reliance MF. The platform will provide liquid schemes of other AMCs soon.
Distributors will have to take a consent from clients and open a liquid fund account to use this facility.
