To allay the fears of distributors regarding the TransactEzz facility to investors, V. Ramesh, CEO of MF Utility MFU has sent a clarification to distributors. Cafemutual has a copy of this communication. The substantive portions are reproduced here:
The objective of MFU is only to be a middleware between the transactors (distributors, transaction platforms, channel partners, RIAs, etc.) and the processors of those transactions (AMCs/RTAs). Such middleware will insulate distributors like you from the impact created due to changes at the processors’ end. Distributors would be able to concentrate more on the business rather than operational activities. MFU is not a platform but a system that will only aggregate transactions thereby providing a single window convenience for transaction submission with a single account (Common Account Number-CAN) at industry level.
There is a fear amongst distributors about MFU possibly approaching investors for investing in direct plans. I would like to make it very clear that MFU is registered as ‘Registrar to the Issue” with SEBI and is regulated by SEBI. MFU will not reach out to investors to market any schemes of any AMC (including direct plans). Communications from MFU will be restricted to CAN related confirmations or transaction related or any other regulatory requirements where the investor has to be communicated directly.
With regard to direct plan availability in our system, we would like to mention the following:
- Direct plans are only enabled in the system; this is similar to any RTA who can accept transactions under direct plan.
- MFU will never popularize direct plan by writing to investors or by giving prominent positions in the website or through any means.
- The MFU website does not mention anything on direct plans.
- MFU does not intend to give any advertisement or marketing initiatives targeting the investors to go direct.
- Every CAN opened, whether it is through distributor or directly, by default will be enabled for physical transactions only and log-in id / password will not be issued to the investor automatically.
- The investor will not be contacted by MFU in any manner to inform on online transaction facility.
- Log in id will not be issued to investors without a specific written request from the investor. Even through online, investor can choose an ARN and invest in Regular plans.
Some facts based on the statistics:
- Out of more than 25,000 CANs opened, investors of only about 950 CANs have asked for login id.
- Out of 950, only 51 CANs are opened by distributors.
- Out of 51 CANs, 30 CANs could be identified to be that of distributors themselves, i.e. a distributor who has opened a CAN has asked for log in id from MF Utility.
- More than 95% of the investor CANs continue to use the distributors.
