SEBI revises cutoff time for investments in mutual fund schemes

Market regulator Securities and Exchange Board of India (SEBI) has revised the cutoff time for mutual fund schemes for both liquid and overnight funds and other schemes.

As per communication from the Association of Mutual Funds in India (AMFI), the revised cutoff timings will be applicable from April 7 to 17, 2020.

Earlier, the cutoff time for liquid and overnight funds was 1:30 PM and for other funds, it was at 3 PM. Other funds include bonds, equity, and hybrid funds.

Amid the nationwide lockdown till April 14, 2020, the offices of the asset management companies and Registrar & Transfer Agents (RTA) are closed. The investors are advised to transact online using mobile applications and websites.

Since the offices are not functioning, the physical forms are not being accepted or processed. Though the financial services are a part of the essential services listed by the government, mutual fund investors have been asked to transact using digital means.

Mutual fund investors have seen their portfolios in the red after the markets sold off discounting COVID-19 pandemic impact on the global economy.

Mutual fund transactions on digital platforms are rising and need to be processed within the turnaround time. Other operational issues such as calculation of net asset values and announcing them are adding to the workload of the mutual funds and RTA’s; especially with reduced capacity due to lockdown. Advancing the cutoff time is seen as a fallout of the same.

RBI has also curtailed the market hours for various segments of bond markets to four hours – 10 AM to 2 PM.

Swarup Mohanty, Chief Executive Officer of Mirae Asset Global Investment India says, “This change in cut-off time is a temporary move and after the lockdown ends, it will be reviewed.”

Cut-off time is an important factor for investors in liquid and overnight funds. However, for the long term investor it should not be as important.