Mutual fund platforms will soon get to charge transaction fees

Mutual fund platforms will soon be allowed to charge investors or fund houses a fee for executing transactions. Sebi has introduced a regulatory framework for an execution-only platform that offers direct plans of mutual fund schemes. "They can charge some money but a commission-like structure will not be allowed," said Sebi chief Madhabi Puri Buch.

Several platforms like ETMoney, GROWW, Zerodha and Paytm offer direct plans to mutual fund investors. Direct plans bypass distributors and result in cost savings to the investors over the long term. Till now, these platforms did not charge investors and did not have any revenue mode as they were not compensated either by the fund house or the investor. This is set to change with the regulator given such platforms two options. They can either register and become an agent of asset management companies or register as a stock broker and become an agent of the investor and earn a fee.

"Direct MFs are commission-free and the right product for investors and have been the fastest growing channel to bring new investors in the industry," said Mukesh Kalra, CEO, ET Money. "The detailed framework, the modalities of implementation, nature of services that may be offered by the EOPs, cyber security requirements, pricing of services, grievance redressal mechanisms, etc. shall be notified through Circulars," said Sebi in a circular.