Discontinuation of pooling for mutual funds and how it affects Coin

Zerodha Coin - Direct MF
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@Bhuvan Can you please clarify that Mutual Fund pledging is still unaffected where as other brokerages discontinued the pledging of Mutual funds?

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I placed my ELSS order today. The current status is Processing: Order sent to AMC. But my funds have not been deducted yet. Kindly confirm at the earliest if the order will be executed?

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Wait for end of day. Check back tomorrow. Did you place the order before the cutoff time?

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Yes, in fact I placed it yesterday after cutoff time.

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Discontinuation of pooling for mutual funds and how it affects Coin - #47 by Bhuvan read the post
it is fortunate that Z has pledge, I dont understand why those others cant.

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Update: This has been postponed till July 01, 2022

Until then things will remain as is on Coin, nothing changes. In the meanwhile, we are trying to figure out a flow that will cause the least amount of disruption and changes as possible, please bear with us. I’ll keep this thread updated as and when we have updates.

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This is so funny. Not from zerodha side but from SEBI. They caused so much confusion, many brokers squared off positions of people who had pledged mutual funds and now at night on 31st March, sebi is postponing it.
Don’t know who is taking these decisions in sebi and why can’t they think of its implications in advance. Just hampering the experience of traders in the largest f&o market in the world.
Thanks bhuvan for this update. And quite happy to see zerodha was one broker which was still allowing pledging of mutual funds, even though not sure how would it have recovered money in case of huge loss to the client

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agree. SEBI acted really strange.

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Thanks @Bhuvan for your update and work in Coin!.

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@Bhuvan
I just wanted to know how will pause function work in future, I mean to ask at present I can pause a sip but once all these rules changes take place will I be able to pause any sip or not via coin.

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We’re trying to figure out a way to keep those features. I’ll keep updating this thread as we figure out more.

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How do I setup a mandate only for MF SIPs

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@Bhuvan

From July, funds should be credited directly from the investors’ account into the mutual fund scheme account without any intermediate pooling. Portfolio managers registered with Sebi have been exempted from this new rule.

I think Zerodha may be planning to go the portfolio managers way as they are not barred into pooling funds as per circular and all existing Coin functionality may remain the same. I’m not sure, but maybe a PMS fund account head will have to be created for clients (with facility to load/withdraw/mandate funds) apart from the existing trading one from where MF transactions can take place.

I’m not well informed in the above, thought this might be the way Zerodha team can go in the future.

Earlier, Sebi said it observed that a few platforms pool the client’s funds into a nodal account and subsequently transfer to fund houses either on per transaction basis or lumpsum basis. Sebi said fund houses can execute transactions either financial or non-financial only if there is a service agreement between them and the service provider.

Some holes here too I guess? “service agreement”

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New rules have been postponed till July 1:

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I was planning to start Mutual Fund SIPs from this month. However, took a step back for a week to understand the impact of the circular. As a new investor, can anyone let me know on the below?

  1. Step-up SIPs would likely be disabled as the transition to AMC SIP will happen. What would be the procedure then to modify the original SIP amount? (suppose I am investing INR 2,000 in one SIP this year, I want this amount to increase to 3,000 the next year).

  2. Any new SIPs I buy from now, should I buy it through COIN SIP mode or AMC SIP mode as this transition is bound to happen (despite the delay)

  3. Suppose I miss an SIP payment, what would happen to my SIP? Will it be closed or any late charges/penalties be levied?

  4. For buying a MF are there any documentations required (KYC, etc.)?

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We’re trying to ensure all these features stay, I’ll confirm in a few weeks.

Either way is fine.

Nothing will happen. The transaction will processed the next month.

Nope, all these things are taken care of when you open your Zerodha demat.

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Just wanted to say this is a very annoying regulation for people like me who have almost all cash with zerodha for trading and have monthly sips and hardly any cash in bank accounts.

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@Bhuvan
After the discontinuation of pooling of mutual funds, will Zerodha change the cut off time with Industry Standard of 3:00pm ?

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@Bhuvan what is the solution being worked now we want to know as July is approaching.
How will coin retain step up, pause SIPs, modify SIPs once this new rule is enforced.
We want to control SIPs from coin and not convert to AMC SIPs else managing demat mode of mutual funds is very difficult and approach to various fund houses.
The whole benefits of coin is lost then if zerodha coin doesn’t implement any solution

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@Bhuvan I started my MF investments through Coin this month only. I didn’t know this info earlier.

My Main worry is Frequency, Stepup sip edit’s possible or not ( after July1st). I have choosen frequently as WEEKLY to all my MF’s as the current situation is volatile. One Sip on Monday , one on tuesday , one on Wednessday & one on Thursday Weekly.

Im currently using one Weekly frequency Bank e-mandate for all these. If after the July 1st if payment link is coming for each one (as mentioned above) then its impossible for me to manage everyday. I’m worried about this.

Please provide a solution for me, else i either has to change my investment style or the app itself as this info is very important to me…