What could be the implications of SEBI permitting investors to directly purchase mutual funds from the stock exchange?

For investors buying mutual funds directly from the exchange can be significant? Here is what you must be aware of about this latest move.

· SEBI allowed investors to directly purchase mutual funds from the stock exchange and this could become significant in the days to come.

· Today, individual investors cannot directly place orders to buy and sell mutual funds units on the stock exchange. These orders can only be placed by SEBI registered brokers and independent financial advisors (IFAs). Now that will not be the case any longer.

· The complex web of back-end transactions that take place between the asset managed company, the Registrar and Transfer Agent (RTA) and the clearing corporation of the stock exchange will still continue in the new system.

· This will address the biggest worry in the BSE STAR MF and the NSE NMF2 system since the trades routed through brokers, would only accept Regular Plans and not Direct Plans.

· Now individuals can pay lower TER to the tune of 125-140 bps by opting to buy Direct Plans of mutual funds from the exchange platform itself.

· There will be consolidation of assets in a single DP account. With Direct Plans available on exchange platform, exchange buying of MFs could take off in a big way.