Though the process to select a vendor is under way, AMFI’s deadline to develop the software in three months is unlikely to be achieved, say sources
The MF Utility committee which met on Thursday is mulling to operate this project on a capex model which would entail a higher upfront cost. Under this model, the entire investment has to be done upfront by AMCs as per their AUM size and investor base.
Some officials are of the view that this software be built on an opex model wherein AMCs won’t have to bear a huge initial cost. Instead, the developer will charge AMCs based on the volume of transactions. An opex model would be profitable for the software developer in the long run as it can generate a steady income stream by charging for transactions.
Industry officials tell us that NSE.IT, CDSL, NSDL, FundSERV, CAMS & Karvy (jointly) and SunGuard are reported to have bid for developing this platform. A section of industry officials feels that given the Karvy and CAMS expertise in MF transaction processing business, the job of developing the MF Utility was best given to them as they would potentially be able to develop it a lower cost. On the other hand, if AMFI awards this contract a big software company then the cost may shoot up as the firm will have to start from scratch.
In 2009 Karvy and CAMS had jointly developed a web based platform called FinNet which is used by distributors. The two registrars manage 90% of AMCs.
The prospective software developers will have to maintain the software for five years post implementation. The MF Utility will provide order routing and payment mechanisms with connectivity to RTAs, AMCs, stock exchanges, DPs, banks and centralized KYC repository.
