BSE mutual fund platform still leaves cost issue open

The Bombay Stock Exchange today launched its mutual fund trading platform, ‘BSE StAR MF’, but there is no clarity yet on the cost structure

Following closely on the heels of its rival, the National Stock Exchange (NSE), the BSE has inaugurated ‘BSE StAR MF’, its independent mutual-fund trading platform. More than 20 fund houses have already confirmed their participation in this venture. While schemes from seven-eight fund houses will be available for trading immediately, others are expected to start trading in the next few days. These fund houses are also expected to join hands with NSE for its trading platform.

Both the Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL) have confirmed their participation as depositories for the new venture. NSDL has initially decided to waive all trading charges on the BSE platform. Karvy and CAMS will provide Registrar and Transfer Agent (R&TA) services.

Although investors now have the added benefit of being able to access their neighbourhood broker for buying, selling and redeeming mutual fund units, a lot of ambiguity still prevails on the cost of trading on this new platform. Industry experts claim broker charges will be on par with normal commission on equities, i.e., around 0.50% of the transaction value. Moneylife had earlier pointed out the possibility of investors actually ending up shelling out more through the broker route than if they approached a mutual fund distributor. However, Deena Mehta, managing director of Asit C Mehta Investment Intermediates, claims otherwise. “We will only charge brokerage at 0.50% for every transaction”, said Mrs Mehta, adding that no additional charges will be levied.

Commenting at the launch, Madhu Kannan, MD & CEO, BSE, said, “Mutual funds have become an essential vehicle for investors to channelize their savings. Given the breadth of our nationwide network, we are positive that investors will find value in this platform. The BSE’s new StAR platform will offer a low-cost inclusive network to all mutual funds and intermediaries in the mutual fund industry.”

BSE’s mutual fund platform, which is more of an order-routing mechanism, will take advantage of over 40,000 terminals spread across India to extend services to mutual fund investors.

Brokers are anticipating good volumes, even from retail investors. An official from a leading fund house, who did not wish to be named, said, “Initially, the response may not be huge, but we do believe that, eventually, investors will come in large numbers as certain modalities are ironed out and things become clearer.”

Describing the difference between the two rival platforms of BSE and NSE, Mrs Mehta said, “The BSE platform is mainly browser-based, providing access anywhere, while the NSE operates on the NEAT system, a dedicated point-to-point connectivity-based system.”

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    Stocks decline on weak global cues

    Sensex sheds 84 points, Nifty loses 23 points due to profit-booking

    Share prices ended lower on Friday on profit-booking amid weak global cues. The BSE Sensex declined 84 points to close at 17,102 while the NSE Nifty closed 23 points lower at 5,109.

    Earlier, Asia’s key benchmark indices in Singapore, Hong Kong and Taiwan fell by 0.25%-0.59%, whereas the indices in China, Indonesia, Japan and South Korea rose by 0.45%-1.61%. 

    In the US market on Thursday, the Dow Jones Industrial Average closed 87 points lower while the Nasdaq Composite and the S&P 500 declined 12 points and 9 points, respectively, on concerns about the implication of Bank of America selling over $19 billion worth of common equivalent securities. The market was also bogged down by weakness in the services sector. According to the Institute for Supply Management’s reading, the services index came in at 47.1, indicating a degree of contraction.

    In the Indian market on Friday, index-heavyweight Reliance Industries (RIL) was down 1%. Towards the end of trading hours, there were reports that Reliance Exploration and Production DMCC (REP), a wholly-owned subsidiary of Reliance Industries, and Ecopetrol SA have signed farm-out agreements, effective from 23 November 2009, for Borojo North Block 42 and Borojo South Block 43 in Colombia, subject to approval by the Colombian national upstream regulator ANH. As per the agreements, Ecopetrol will acquire a 20% stake in the blocks while REP will retain the balance stake and operatorship of these blocks. The two deepwater blocks cover an area of around 8,000 sqkm in water depths ranging from 60 to 1,500 metres.

    Reliance Infrastructure was up 1% after the firm won a road project worth Rs1,725 crore in Maharashtra from the National Highways Authority of India.
    Fedders Lloyd Corporation shot up 5% after a consortium of the company received an order worth Rs120 crore.

    Unichem Laboratories surged 7%, after the company’s wholly-owned unit, Niche Generics, received marketing authorisation for Anastrozloe tablets in a number of markets within the European Union.

    Bilpower Ltd was up 14% after it announced that its subsidiary, Tarapur Transformers, will launch an initial public offer (IPO) of 85,00,000 equity shares though a 100% book-building process.

    Navin Fluorine International was up 6% on reports that the company has received 5 lakh carbon credits from the UN, valued at 7 million euros.

    Gujarat Fluorochemicals gained 4% on reports that the company is likely to bag 1.5 million carbon credits, valued at 18 million  euros, in mid-December.
    SRF is likely to bag 9.5 lakh carbon credits, valued at 12.6 million euros. The stock jumped 3%.

    During trading hours, finance minister Pranab Mukherjee told Parliament that the government has no intention of using the proceeds of stake sales in state-run firms to cut its fiscal deficit, but would use them to fund social support programmes.
    According to World Bank president Robert Zoellick, India could return to a higher growth trajectory of 8%-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth. He also said that excess liquidity in the global markets is a matter of concern as it was pushing up agricultural commodity prices.

    According to an RBI survey of professional forecasters, wholesale price inflation is expected to average 5.8% in fiscal year 2010-11. Based on the government’s budget estimates, India’s gross fiscal deficit at the end of the current fiscal will reach 10.2% of gross domestic product, RBI deputy governor Usha Thorat said.
    Meanwhile, the UPA government cleared the introduction of the State Bank of India (Amendment) Bill. The Bill seeks to bring the government’s holding in the country’s largest public sector bank down to 51% from 59%. Under the present laws, the government’s stake in SBI cannot fall below 55 %.

    However, the Cabinet has deferred a decision on the controversial Pension Fund Regulatory and Development Authority Bill (PFRDA). Although the Bill was listed in the agenda paper of the meeting, it was not discussed and is likely to be taken up in the next Cabinet meeting. The proposed legislation seeks to bring foreign direct investment (FDI) into the sector by allowing foreign players to hold up to a 26% stake in Indian pension fund companies. It will also permit pension funds to deploy a part of their corpus abroad in approved instruments.
     — Swapnil Suvarna

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    Computerised CAT gets extension for a day

    The CAT 2009 has been extended to accommodate, within this year's testing period, all the registered candidates to whom the test has yet to be delivered as scheduled

    The first computer-based Common Admission Test (CAT), which has been disrupted by virus attacks, was toady extended by a day till 8th December.

    The entrance for admission to Indian Institutes of Managements (IIMs) will now spread over 11 days instead of 10 days as earlier scheduled by Prometric, the American firm conducting the test through computers. The test was scheduled to run in a staggered manner for 10 days from 28th November to 7th December.

    Meanwhile, convener of the computerised Common Admission Test (CAT) Satish Deodhar on Friday said the test for entry into the IIM was “running smoothly” after initial glitches and there were no reasons to scrap it.

    "As a convener, my duty is to ensure that each and every student who had applied for CAT does not face any difficulty in appearing for it," Mr Deodhar, who teaches at IIM-Ahmedabad told PTI.

    "As of now, I have been asked by the IIMs to reschedule it for students who were affected by glitches and make sure that it goes on smoothly," he said.

    He said the directors of all the IIMs can only collectively take a decision on CAT. "Therefore, there is no reason for computerised CAT to be scrapped. The tests should be conducted as planned."

    Except for two testing labs which remained closed, tests across the country were running smoothly, he said.

    Prometric, the American firm conducting the test, had said the initial glitches were due to virus attacks and hardware problems.

    Mr Deodhar said Prometric has set up a help desk with over 60 phone lines to cater to students whose tests have been rescheduled.

    "They (Prometric) have also increased the number of personnel to answer students’ queries," he said.

    IIM-Ahmedabad director Samir Barua has assured that all registered students will be able to take the computer-based test and, if required, the test schedule would be extended by a couple of days.

    More than 8,000 students were affected by glitches, primarily caused by virus attacks, during the first couple of days. For the affected students, the test is being rescheduled at centres with spare capacity.

    The computer-based test had been marred by technical glitches from the very first day on Saturday. Students faced problems with the computers at the exam centres in Delhi, Mumbai, Pune, Chennai, Bengaluru, Kolkata and Bhopal.

    This year, 2.41 lakh students will be taking CAT for entry into the IIMs and other premier management institutes.
    — Yogesh Sapkale

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