Market regulator Securities & Exchange Board of India (SEBI) has asked mutual fund (MF) registrar and transfer agents (RTA) to jointly develop and implement a common industry-wide platform for MF investors. The inter-operable platform will allow MF investors to place both transaction and service requests.
SEBI has also asked asset management companies (AMCs) and depositories to facilitate the RTAs for development of the proposed platform. Through this platform, investors will be able to access these services for all MFs in an integrated manner, SEBI said in a circular.
“RTAs shall implement standardised practices, system interoperability amongst themselves to jointly develop a common industry wide platform that will deliver an integrated, harmonized, elevated experience to the investors across the industry,” SEBI said.
How Will the Joint Platform Help?
Currently, MF industry has two RTAs—Computer Age Management Services Ltd (CAMS), and KFin Technologies Pvt Ltd. Investors have to use the websites of 40 different MFs or the services of distributors or commercial platforms for transactions. It is also difficult for investors to obtain account statements.
Though the RTAs send common statements by email from each of their websites on request, very few investors are aware of this option. This inter-operable platform would make life easier for investors.
Service requests such as change of contact details or change in bank account can be carried out on this platform in a seamless digital manner.
The platform will be jointly built by RTAs—KFintech and CAMS. During the first phase, the investors will be given access to the platform. Subsequently, the same will be made available to distributors, registered investment advisors and other stakeholders.
If one has invested in an MF that is serviced by, say CAMS, and then in another fund house that is serviced by KFintech, and if one wishes to change the bank account in both, then, as per the current process, one has to approach CAMS and KFintech, separately. But once this common platform goes live, the investor could effect changes in both these schemes on this platform in one shot.
After the launch of this platform, the investors can initiate such requests at one go irrespective of fund houses and RTA.
This is going to save costs for the investors in terms of efforts and time. The paperwork involved in such requests will be cut significantly and transaction rejection rate is also expected to decrease.
The entire process will also get standardised since it will be an industry-wide platform. There will be one process – one form, one documentation and one turn-around time for services across mutual funds.
It is often observed that forms and documentation required vary across the 40 different mutual funds.
The platform will be rolled out in phases and seeks to enable a user-friendly interface for investors for execution of MF transactions, initiation and tracking of service requests as well as queries and complaints, access investment-related reports, transactions reports, capital gains or loss report, details of unclaimed dividend and redemption among others.
The investors can also track the progress of their service requests and file complaints. In the second phase, the investors can also carry out financial transactions such as purchase, redemption and switch, in addition to service requests.
SEBI said AMCs, RTAs and depositories will have to take necessary measures to provide data via application programming interface (API) on a real-time basis to the proposed platform. Additionally, RTAs and depositories will also share their respective data feeds between themselves for generation of investment-related reports.
The platform may also, over time, provide services to the distributors, registered investment advisors, AMCs, stock exchange platforms and digital platforms for transacting in MF to further augment ease of investing and servicing of investors through the stakeholders in consultation with SEBI.
Further, AMCs, RTAs and depositories will have to review and agree to harmonise the processes across the industry to provide a single-window, integrated, simplified investment and service experience for the investors.
They will have to adopt the data definitions and standards as recommended by SEBI for data exchange amongst various participants.
The platform should be scalable with robust cyber security protocols and supported through an API-based architecture. In this regard, SEBI said the platform will have to adopt the cyber security and cyber resilience framework specified by the regulator from time to time to market infrastructure institutions — stock exchanges, depositories and clearing corporations — and qualified RTAs.
In addition, on request basis, APIs could be exposed to other industry stakeholders such as distributors, registered investment advisers, stock exchange platforms and digital platforms among others with due approval of the concerned MF on mutually agreed terms.
The RTAs will be jointly and severally responsible for compliance with all the applicable regulations including system audit and cyber security audit.
Further, RTAs will have to ensure that the platform complies with the guidelines for business continuity plan (BCP) and disaster recovery (DR) specified to market infrastructure intermediaries (MIIs).
All the stakeholders have been asked to collaborate and work together towards the development and implementation of the proposed investor-friendly platform.
“AMCs and depositories will have to facilitate and RTAs will have to make the platform operational in a phased manner (starting with non-financial transactions) and will be fully operational by 31 December 2021,” the SEBI circular said.
SEBI has also asked AMCs, RTAs, depositories, nodal industry body Association of Mutual Funds in India (AMFI) and key stakeholders to create an awareness about this initiative amongst the investors.