In the wake of the Securities and Exchange Board of India (SEBI) circular dated November 13, 2009 regarding the facilitating of transactions in mutual fund schemes through the stock exchange infrastructure, the National Stock Exchange (NSE) has announced a proposal regarding the introduction of the Mutual Fund Service System (MFSS).
'MFSS' means a facility where the participants can buy/redeem units of eligible mutual fund schemes using network and order collection mechanism provided by NSE and clearing and settlement mechanism adopted by NSE in order to facilitate such activities through its subsidiary the National Securities Clearing Corporation Ltd.(NSCCL).
The new system is slated to commence from November 30, 2009.
In order to participate in the new MFSS, trading members are required by the NSE to comply with some documentation requirements. According to NSE circular, “All trading members of the exchange who are registered with Association of Mutual Funds of India (AMFI) as mutual fund advisors and who have signed up with the specific Asset Management Company (AMC) of a mutual fund are eligible to participate in the new MFSS. For this purpose, trading members shall have to register with NSEIL as participants by submitting an undertaking.”