Snags mar online mutual fund platforms at bourses

Lack of participation from several mutual fund houses and operational glitches have led to poor volumes on the mutual fund online platforms of the stock exchanges. Since the launch of online mutual fund platforms by Bombay Stock Exchange (BSE) as well as National Stock Exchange (NSE) in December last year, there has been poor response from the investors.

Rakesh Goyal, head, distribution at Bonanza Stock Brokers, which sells funds via online platform says, ?There are some issues on the technical as well as operational sides. We have informed the exchanges regarding them and expect an early solution.?

He adds that if an investor wants to invest in mutual funds and he goes to the office of registrar, then he gets his net asset value (NAV) on that particular day itself. In case of an online platform, however, it takes over three days as asset management companies provide NAV only after the cheque is cleared. Some market participants also cite lack of public awareness as the main reason for poor volumes.

The online platform of NSE called Mutual Fund Service System (MFSS) was launched in November last year.

The average NSE transaction value in December, 2009 was over Rs 17 lakh (including subscription and redemptions), which has come down to over Rs 14 lakh in March (witnessing a fall of over 21%).

While on the BSE StAR platform, the average turnover was over Rs 1.04 crore in December last year; it went down to over Rs 85.05 lakh in March (23% drop).

Waqar Naqvi, CEO of Taurus Mutual Fund says, ?At this point of time, we are not interested on going online at the exchanges, as volumes are very low.? According to him, this platform will take some time to adapt and in the long-term will have positive impact on the mutual fund industry.

Average of total value in January was over Rs 55 lakh on BSE, which came down to approximately Rs 14 lakh in February. In April till Friday, it was at over Rs 92.69 lakh.

While at NSE, in January, it stood at Rs 16.5 lakh, it dipped to Rs 6.45 lakh in February and in April, it is at approximately Rs 10.69 lakh.