1          Eligible Participants for MFSS

As specified vide SEBI circular SEBI/IMD/CIR No.11/183204/2009, trading members of the Exchange who are ARN holders and who have passed the AMFI certification examination will be permitted to participate (herein known as Participant) in this MFSS. Trading members who wish to participate will be required to apply to the Exchange and also undertake to comply with the requirements of the SEBI/Exchange for MFSS which will be notified from time to time. Specific reference is also drawn to all requirements as brought out in the above SEBI circular dated November 13, 2009.

Participants fulfilling the above requirements and wishing to participate in MFSS shall provide specific undertaking to the Exchange as per format in Annexure 2.

2          Market hours

MFSS will be available on all business days of the Capital Market segment. The MFSS will be available for Participants between 9 a.m. until 3 p.m.

3          Eligible schemes

Asset Management Companies (AMC) desirous of providing this alternate mechanism to their potential customers shall enter into an agreement with the Exchange/Clearing Corporation. AMC shall notify schemes which they wish to permit on the MFSS.  All schemes which are available on MFSS shall be informed to the Participants through circulars. The Exchange shall also keep the Participants informed of additions and deletions of such offerings through prior notification.

4          Order collection  

A fully automated on-line order collection system called NEAT-MFSS will be provided to the Participants. The Participants can use their existing telecom network to connect to this system to enter requests for subscription and redemption of units of schemes available on the MFSS.

Participants can choose between Physical mode and depository mode while capturing subscription / redemption requests on the MFSS. A detailed process for subscription and redemption is provided in subsequent sections.

A registered investor of a Participant, who has signed up for MFSS as per Annexure 3 can decide to place an order for subscription or redemption through MFSS.

5          Settlement procedure

5.1         Funds Settlement

The pay-in of funds for subscription shall be through the designated bank accounts. The subscription transactions shall be settled on a T+1 basis as per time lines specified by the Clearing Corporation. Failure to provide for funds at the specified time will result in action as specified in the clause on funds settlement for subscription as below. Pay-out of funds for redemption transactions shall be directly made to the investors from the RTA for both physical mode as well as Demat mode.

5.1.1        Designated Bank account

Participants who wish to participate in the MFSS shall open separate Bank account with any of the Clearing Banks identified by the Clearing Corporation, which shall be the designated bank account for giving effects to funds debit under MFSS.

5.2         Securities Settlement

Securities settlement can be either through the RTA (if physical mode) or through the Depository (if Demat mode).

A detailed process steps are given below for both subscription and redemption.

5.3         Detailed procedure

1. Subscription – Physical Mode
2. Subscription – Depository Mode
3. Redemption – Physical Mode
4. Redemption – Depository Mode

A. Subscription – Physical Mode

T Day activities

1.      Investor who chooses physical mode has to submit the following documents/details along with clear funds to the Participant:

·        Completed and Signed respective scheme Application Form

·        Copy of PAN Card of first holder

·        Copy of PAN Card of each additional holder in case of joint investment

·        Copy of KYC acknowledgement form (in case the of investment of Rs. 50,000/- and above) of all holders

·        Copy of Guardians PAN Card in case investment is on behalf of minor

·        Folio No. in case the subscription is an additional purchase.

2.      The Participant shall verify the application for mandatory details including PAN details  and KYC compliance form enclosed if the investment is above Rs. 50000/-

3.      After completing the verification, Participant shall enter the subscription order on the MFSS front-end system with the option of ‘Physical’ settlement. For Physical order the folio No (if available) is captured on the MFSS front-end. The MFSS will identify each scheme uniquely in terms of Symbol & Series. Subscription orders would be created in terms of Amount. Once the order is created, system will generate a unique confirmation No. for the order.

4.      The investor will receive from the Participant a confirmation slip (which will contain unique confirmation number and date and time stamp of order entry) generated from the MFSS system. Till the Participant provides allotment details to the investor, the order confirmation slip would be the proof of the transaction. In addition, for physical mode, the investor will receive Statement of Account from the RTA directly. 

5.      Participant will write the unique confirmation number on the physical documents and deliver the same at any of the RTA /AMC offices as may be intimated from time to time.

6.       Exchange will validate these transactions on T day evening with the RTA and any discrepancy in the transaction details will be informed to the Participant on the same day evening.

7.      The Clearing Corporation shall also provide the Participants with funds obligation report end of day for all the valid transactions.

T+1 Day activities

8.      The Clearing Corporation of the Exchange shall debit the designated clearing bank account of the Participants for the required funds obligation on T+1 morning.

9.      in case of shortage if any, the concerned Participant will be provided an opportunity to identify transactions and provide details of the transactions for which payments have been received and transactions for which payment have not been received. 

10.  The funds collected from the bank account of the Participant shall be compared with the details provided by the Participant on the payment received status as per above. If the funds collected from the bank account of the Participant covers the details of the payments received as provided by the Participant, the same shall be further processed. Wherever the funds collected from the bank account falls short of the amount indicated in the details provided by the Participant, the details shall be considered defective and shall not be further processed.  In such cases, the funds collected, if any, shall be returned to the designated bank account of the Participant.

11.  The Exchange / Clearing Corporation shall take appropriate action including penalty on participants who fail to fulfil their funds obligation as required.

12.  The Exchange will notify RTA for all such defective transactions and rejections due to non payment of funds. The RTA will reverse such transactions for respective Participants and transactions for other Participants who have fulfilled their funds obligations will be processed by the RTA. The RTA will intimate the allotment details for the accepted transactions including folio numbers.

13.  Allotment information shall be provided to the Participants so that they can provide allotment details to the investor.

B. Subscription – Depository Mode

T Day activities

1.      Investor who chooses depository mode can place order for subscription as currently followed for secondary market activities. The investor should provide their depository account details along with PAN details to the Participant. When investor desires to hold units in dematerialised form, KYC performed by DP will be considered compliance with applicable requirements specified in this regard in terms of SEBI circular ISD/AML/CIR-1/2008. This is in accordance with SEBI circular no SEBI/IMD/CIR No.11/183204/2009 dated November 13, 2009.

2.      Participant shall enter the subscription order on the MFSS front-end system with the option of ‘Depository’ settlement. The MFSS will identify each scheme uniquely in terms of Symbol & Series. Subscription orders would be created in terms of Amount. Once the order is created, system will generate a unique confirmation No. for the order.

3.      The investor will receive from the Participant a confirmation slip (which will contain unique confirmation number and date and time stamp of order entry) generated from the MFSS system. Till the Participant provides allotment details to the investor, the order confirmation slip would be the proof of the transaction.  In the case of demat mode, demat statement given by depository participant would be deemed to be adequate compliance of the requirement of Statement of Account as specified in SEBI circular number SEBI/IMD/CIR No.11/183204/2009. 

4.       Exchange will validate these transactions on T day evening with the RTA as well as the depository and any discrepancy in the transaction details will be informed to the Participant on the same day evening.

5.      The Clearing Corporation shall also provide the Participants with funds obligation report end of day for all the valid transactions.

T+1 Day activities

6.      The Clearing Corporation of the Exchange shall debit the designated clearing bank account of the Participants for the required funds obligation on T+1 morning.

7.      in case of shortage if any, the concerned Participant will be provided an opportunity to identify transactions and provide details of the transactions for which payments have been received and transactions for which payment have not been received. 

8.      The funds collected from the bank account of the Participant shall be compared with the details provided by the Participant on the payment received status as per above. If the funds collected from the bank account of the Participant covers the details of the payments received as provided by the Participant, the same shall be further processed. Wherever the funds collected from the bank account falls short of the amount indicated in the details provided by the Participant, the details shall be considered defective and shall not be further processed.  In such cases, the funds collected, if any, shall be returned to the designated bank account of the Participant.

9.      The Exchange / Clearing Corporation shall take appropriate action including penalty on participants who fail to fulfil their funds obligation as required.

10.  The Exchange will notify RTA for all such defective transactions and rejections due to non payment of funds. The RTA will reverse such transactions for respective Participants and transactions for other Participants who have fulfilled their funds obligations will be processed by the RTA. The RTA will intimate the allotment details for the accepted transactions. 

11.  Allotment information shall be provided to the Participants so that they can provide allotment details to the investor.  In the case of demat transaction, demat statement given by depository participant shall be considered as fulfilling the requirement of Statement of Account.

12.  RTA will also credit the depository account of the investor directly end of day through credit corporate action process.

 C. Redemption – Physical Mode

T Day activities

1.      Investor who chooses physical mode has to submit the following documents/details to the Participant:

·        Completed and Signed redemption request stating the Folio no.

·        Copy of PAN Card of first holder

·        Copy of PAN Card of each additional holder in case of joint investment

·        Copy or allotment statement / holding statement/ SOA displaying the scheme holdings to be redeemed

·        Copy of Guardians PAN Card in case investment is on behalf of minor

2.      The Participant shall verify the application for mandatory details, investor identity and verifies the signature on the application against the PAN signature.

3.      After completing the application verification, the Participant shall enter the redemption order on the MFSS system with the option of ‘Physical’ settlement. The MFSS will identify each scheme uniquely in terms of Symbol & Series. For physical orders the folio No is captured on the MFSS front-end. Redemption orders would be created either in terms of Amount or Quantity for physical settlement. Once the order is created system will generate a unique confirmation No. for the order.

4.      The investor will receive from the Participant a confirmation slip (which will contain unique confirmation number) generated from the MFSS front-end system. This will be the proof of the transaction for the investor till the redemption proceeds are received from the registrar.

5.      The Participant will write the unique confirmation number on the physical documents and deliver the same at any of the RTA /AMC offices as may be intimated from time to time.

6.      Exchange will validate these transactions on T day evening with the RTA and any discrepancy in the transaction details in terms of folio number etc will be informed to the Participant on the same day evening.

T+1 Day activities

7.      RTA will carry out the redemption processing at its end and provide final redemption information to the Exchange on T+1. The file will contain information about valid and rejected redemption orders. For successful redemptions, the file will contain the redemption NAV, units redeemed, redemption amount, STT (if any).  The payouts however will happen as per the scheme provisions and within the timelines as per SEBI regulations as applicable from time to time.

8.      Redemption information shall be provided to the Participants through files so that they can provide Redemption details to the investor.

9.      The redemption proceeds will be directly sent by RTA through appropriate payment mode such as direct credit, NEFT or cheque as decided by AMC from time to time, as per the bank account details recorded with the RTA.

10.  It would be the primary responsibility of the Participant to ensure completeness of the documents including ensuring filling up of the all Key fields by the investor before accepting the same for processing. It would also the responsibility of the Participant to ensure identity and authentication of signature affixed based on the original PAN shown at the time of accepting the redemption application form. A copy of the PAN will be sent alongwith the redemption request. In case of joint holding, this will be ensured by the Participant for all holders. In case the subscription application form has not been reached to the RTA, the redemption request for such subscription will not be taken by the RTA and shall be rejected.

D. Redemption – Depository Mode

T Day activities

1.      Investor who chooses depository mode can place order for redemption as currently followed for secondary market activities. The investor should provide their depository account details along with PAN details to the Participant. The investor should also provide their Depository Participant with Depository instruction slip with relevant units to be credited to Clearing Corporation pool account same day before 4.30 p.m.

2.      The Participant shall enter the redemption order on the MFSS system with the option of ‘Demat’ settlement. The MFSS will identify each scheme uniquely in terms of Symbol & Series. For demat, redemption orders would be created only in Quantity. Once the order is created system will generate a unique confirmation No. for the order.

3.      The investor will receive from the Participant a confirmation slip (which will contain unique confirmation number) generated from the MFSS front-end system. This will be the proof of the transaction for the investor till the redemption proceeds are received from the registrar

4.      Exchange shall validate the depository redemption orders with the depository as well as RTA on T day evening and any discrepancy in the transaction details in terms of DP id etc will be informed to the Participant on the same day evening.

5.      Subsequent to the validation, Clearing Corporation will provide valid orders to depository to validate the delivery instructions (DIS) received from the investor and accept units received if they are equal to the valid transactions. The units thus received will be credited to the beneficiary account of the AMC(s) by the Clearing Corporation.

6.      For all units received through the depository system as above, the Exchange will inform the RTA same day with details of the addresses and bank mandate as captured on the depository system. 

T+1 Day activities

7.       RTA will carry out the redemption processing at its end and provide final redemption information to the Exchange on T+1. The file will contain information about valid and rejected redemption orders. For successful redemptions, the file will contain the redemption NAV, units redeemed, redemption amount, STT (if any).  The payouts however will happen as per the scheme provisions and within the timelines as per SEBI regulations as applicable from time to time.

8.      Redemption information shall be provided to the Participants through files so that they can provide Redemption details to the investor.

9.      The redemption proceeds will be directly sent by RTA through appropriate payment mode such as direct credit, NEFT or cheque as decided by AMC from time to time, as per the bank account details recorded with the RTA.

10.  The units will be extinguished by the RTA from the beneficiary account of the AMC(s)

5.4         MFSS Calendar

The Exchange shall specify the MFSS calendar from time to time. A typical cycle for MFSS transaction shall be as under:

6          Investor Grievance  

In case of any dispute between the Participant and the investor arising out of the MFSS, the Exchange shall provide support for the speedy redressal of the dispute through the Investor Grievance Cell.