The Bombay Stock Exchange (BSE) on Tuesday said it would launch a trading platform for mutual fund (MF) units on December 4. The move comes a day after the National Stock Exchange (NSE) launched a similar platform. Central Depository Services Ltd will be the BSE’s depository partner.
Tata Asset Management Company would be the first to list its units on the BSE platform. The NSE had started trading with 30 schemes of UTI Mutual Fund.
Trading of MFs units on stock exchanges is likely to pick up following the ban on entry load for equity schemes. The entry load charged from investors was being passed to distributors.
While there would be no entry load on investors in MFs through stock exchanges, stock brokers would be able to charge a brokerage fee. Also, the stock exchanges would charge a nominal transaction fee, which the NSE has waived for the first few months.
In addition to this, the Association of Mutual Funds Industry (AMFI) is planning to launch another MF trading platform for investors who do not have a demat account. The account is a must for investors willing to buy MF units from stock exchanges.
After the launch of the platform, the BSE was planning to launch data feed that would be several times faster than the existing one, said a top BSE official. The BSE’s “fastcast” technology will deliver data to brokers at 500- 700 kilobytes per second, compared with the present speed of 100-150 kilobytes per second. The rollout of this low-latency feed is targeted mainly at algorithmic traders.