Up until now, whenever you invested in mutual funds, the funds would be deducted from your trading account just like stocks. On October 4th SEBI issued a circular that disallows pooling of funds for mutual funds from April 1st, 2022.
This circular means a complete change in the way Coin works since funds in your trading account can no longer be used to invest in mutual funds. Under the new regime, if you want to buy Mutual funds, you’ll have to make payments to the AMC directly from your Bank account. Likewise, when you redeem Mutual funds, the credit will hit the Bank account linked to your demat account…
Traders pledge their mutual funds and raise margins to trade in the F&O segment. In case there’s a debit in the trading account, the Broker will have to resort to invoking the Mutual funds to recover debit in case the client does not clear the debit in time. I’ll post an update at a later date as to how this would work.
We’ll transition to the AMC SIP mode of investing for all SIPs. The way this would work is you would set up a mandate for all your SIPs directly from your bank account. Other modes of payments like UPI and Net Banking can be used for all lumpsum transactions.
This would also mean that some of the features like instant pause and modification of SIPs and step-up SIPs would no longer work. Having said that, these are features that all the users love. In fact, the response to step-up SIP has been phenomenal, over 70% of all new SIPs have step-up SIPs schedules set for them. In order to ensure all these features continue to work as usual we are figuring out a new structure for the flow of funds and hope to be ready by the time this transition happens.