Summer Internship Project Report

On

STUDY OF BSE STAR MUTUAL FUNDS

At BSE, Delhi

By

AASTHA BISHT

Internship period of six weeks

(May 25 '18- July 6 '18)

In Partial Fulfillment of the Requirements for the Award of the

Degree in Bachelor of Business Administration (Finance &
Investment)
DECLARATION BY THE STUDENT

I hereby declare that this internship report, submitted to BSE India, is a record of an official work done by me
under the guidance of Mr Rajeev Garg. The project is submitted in the partial fulfillment of the requirements
for the award of the degree of Bachelor of Business Administration (Finance&Investment). The results
embodied have not been submitted to any other University or Institute for the award of any degree or diploma.

Aastha Bisht
CONTENTS

S No. TOPICS

EXECUTIVE SUMMARY

INTRODUCTION TO TOPIC

BOMBAY STOCK EXCHANGE

STAR MF PLATFORM

QUESTIONNAIRE

RESULTS

ANALYSIS AND
RECOMMENDATIONS

FAQs

BIBLIOGRAPHY
ACKNOWLEDGEMENT

I would like to express my heartfelt thanks to many people. This dissertation is an effort to contribute towards
achieving the desired objectives. In doing so, I have optimized all available resources and made use of some
external resources, the interplay of which, over a period of time, led to the attainment of the set goals.
I take here a great opportunity to express my sincere and deep sense of gratitude to my esteemed mentor MR
RAJEEV GARG for giving me an opportunity to work on this project. The support & guidance from sir, was of
great help & it was extremely valuable.
I also express my sincere thanks to all the people who, directly or indirectly, contributed in time, energy and
knowledge to this effort.

Aastha Bisht
EXECUTIVE SUMMARY

STAR MF PLATFORM OF BSE

BSE launched its BSE StAR MF platform on December 4, 2009. BSE Ltd offers its platform to Mutual Fund
Distributors (MFDs) to purchase and redeem mutual fund units on behalf of their clients.
For the aforesaid purpose, only a Mutual Fund Distributor registered with Association of Mutual Funds in India
(AMFI) and who has been permitted by the concerned recognized stock exchange, shall be eligible to use
recognized stock exchanges' infrastructure to purchase and redeem mutual fund units directly from Mutual
Fund / Assets Management Companies. It offers a number of benefits including reduction of paperwork,
ensuing errors, reduction of redundancy in process, data duplication at RTA and distributor levels and de-
risking MF settlement processes. This project aims to evaluate the working of the platform with
recommendations to improve its interface based on surveys and observations.
INTRODUCTION TO TOPIC
Established in 1875, BSE (formerly known as Bombay Stock Exchange Ltd.), is Asia's first & the Fastest Stock
Exchange in world with the speed of 6 micro seconds and one of India's leading exchange groups. Over the
past 143 years, BSE has facilitated the growth of the Indian corporate sector by providing it an efficient capital-
raising platform. Some of the facilities provided by BSE in the capital market includes:

1. Exchange
2. Clearing Corporation (Central Counter Party)
3. Central Securities Depository
4. Marketplace Technologies

In order to extend the convenience that investors in the secondary market have, to investors in Mutual funds, a
SEBI Committee under the chairmanship of Mr. K N Vaidyanathan, ED - FII & MF consisting of representatives
from Exchanges, industry and depositories was set up to consider the feasibility of allowing Stock Exchanges
(SEs) to offer their existing infrastructure for buying and selling of MF units, in addition to the prevailing
distributor / Independent Financial Advisor route. The Committee appointed a sub-group consisting of
representatives from BSE Limited, National Stock Exchange (NSE) and two Mutual Funds to map out the
modalities. Thus, Star MF was established as a result in 2009.
Since its inception, the product has gone to achieve various accolades for its services and efficiency. In this
report, we will be studying consumer reviews on the platform.
PLATFORM PROFILE

BSE launched its BSE StAR MF platform on December 4, 2009 in the presence of Mr. C B Bhave, SEBI
Chairman. BSE StAR MFTM is a browser based front end. Its architecture provides scalable operation and
flexible deployment options while ensuring data integrity for improved performance. The system uses
ASP.NET as browser based front-end and RDBMS as the back end database.
The platform is feature-rich and highly flexible - it has link-ups with both depositories CDSL and NSDL, facility
for one-time registration of client to avoid extra key strokes for repeated buy/sell requests, detailed easy-to-use
information on various schemes being offered through the platform and report management features.

BSE StAR MF is configured to accept both physical applications and those in Demat form. Brokers of BSE
who are registered ARN (AMFI registration No.) holders are eligible to participate on this platform as Mutual
fund Intermediaries (MFIs). MFIs who enter applications for investors who have chosen the Demat Option
need not send any physical documents to the RTA and will retain the applications in their office along with all
necessary annexures. However where investors have opted for Physical Route, the MFIs would be required to
send the physical applications along with annexures to the nearest offices of the RTA as per mutually agreed
timelines.

Some of the advantages of Star MF platform are:

● Independent view of customer's entire portfolio at one place

● Reduction of paperwork and ensuing errors
● Reduction of redundancy in process and data duplication at RTA and Distributor levels
● De-risking MF settlement processes by using superior Delivery v/s Payment (DVP) process provided
by Stock Exchanges
● Efficiently & effectively address customer servicing issues
● Extending present convenience available to Secondary market to mutual fund investors
● Enable transparency to customers
● Enable charging customers for service at the point where it is rendered
Note: 50 people who had been trading in mutual funds were chosen at random for the purpose of this
survey. These people were familiar with BSE’s Star MF platform and had used it atleast once.

QUESTIONNAIRE

1. How do you trade in Mutual Funds?

a. Offline
b. Online
2. Where from you purchase Mutual Fund?
a. Direct from the amcs
b. Brokers only
c. Brokers / Sub-brokers
d. Others sources
3. How do you find the registration process for Mutual Funds?
a. Easy
b. Manageable
c. Hard
4. How much does availability and variety of AMCs on MF Platform matter?
a. A lot
b. Indifferent
c. Very little
5. How much does easy of using interface matter to you?
a. A lot
b. Indifferent
c. Very Little
6. Rate BSE’s Star MF platform on a scale of 1-5 on the following:
a. Ease in Registering
b. Number of AMCs available
c. Ease in using Interface
RESULTS

1. 100% people surveyed were trading online. Additionally, they were well aware of the market and
available platforms like NSE-MF II and MFU.

2. 40% percent of the people purchase MF directly from Asset Management Companies. Some of the
most common AMCs used were HDFC Mutual Funds, Kotak Finance and SBI Mutual Funds. The
remaining 60% purchase MFs from Mutual Fund Distributors MFDs. There aren't any common MFDs
these people purchase MFs from. Each person deals with a different distributor.

3. 45% people find the traditional Mutual Funds Registration process hard. Some of the reasons are
difficulty in arranging documents every time, long waiting periods and confusion in which documents to
submit. 30% found the process moderately difficult and defined it as a 'mild discomfort which is
necessary'. The remaining 25% do not mind the process.
4. 30% people care a lot about the number of AMCs registered on a platform. They mention it is so
because their MFD gets a wider choice among which funds to choose. 60% say it mostly matters, so as
if everything else remains constant, they would prefer the platform which has more AMCs registered.
10% of the people were indifferent. Coincidentally, they also believed in low risk moderate yield
investments in our preliminary interview.

5. 6% people mentioned it matters a lot as they do not get a lot of time to browse through the entire
website understand its functioning. 28% of the people mentioned it moderately affects their choice,
while 66% of the people agreed that interface doesn't matter as long as the commission is low and
choice is available.

6. a) With 10 perfect ratings, the average for registration process of Star MF comes out to be 3/5.
Considering 80% of the population surveyed prefers a simple registration process (even in not
aggressively), it shows Star MF is extremely attractive in this respect.
 b) Star MF received a 4/5 rating for number of AMCs registered on the platform. The recent fee waiver
for AMCs with brought numerous AMCs on board has definitely benefited the website. As much as
90% of the market demands large number of AMCs as it offered wider choices at competitive prices.

c) Star MF platform received a low rating of 2/5 on their interface. The reason given was it wasn't user
friendly or for beginners.

ANALYSIS & RECOMMENDATIONS

BSE's Star MF shows promise as it fulfills multiple requirements of the consumers' expectations. However as
competition is high, it can always improve through its interface and commission. It can enhance its platform to
be more user friendly and involving graphics to help navigate. Fortunately, the platform is continuously
developing to engage more users.
Some upcoming features of Star MF are:
● Consolidated AUM at Industry level with breakups at Fund, Scheme Category levels and ranking of the
distributor in comparison to the industry
● CAS can be generated on demand. Full statement will be emailed to the investor. ARN level will be
viewable by the ARN holder.
● Consolidated Download / Mail-back feeds
● Centralized Alerts, Reminders etc.

FAQs

What is a Mutual Fund?

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.
The money thus collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital appreciation realised are shared by
its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is one of the most
suitable investments for the common man as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. It is an ideal tool for people who want to invest but don't
want to be bothered with deciphering the numbers and deciding whether the stock is a good buy or not..

Who can invest in a Mutual Fund?

Anybody with an investible surplus of as little as a few hundred rupees can invest in mutual funds. The
investors buy units of a fund that best suit their investment objectives and future needs. A Mutual Fund invests
the pool of money collected from the investors in a range of securities after charging for the AMC fees.

How does a Mutual Fund appreciate your investment?

A mutual fund manager proceeds to buy a number of stocks from various markets and industries. Depending
on the amount you invest, you own part of the overall fund. The beauty of mutual funds is that the investor can
reap returns as high as those of equity markets or have a steady and comparatively secure investment as
offered by debt instruments. A Mutual Fund is thus, not an alternative investment option to stocks and bond;
rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and
other types of securities.

What are the advantages of investing in a Mutual Fund?

There are several benefits from investing in a Mutual Fund.

Small investments: Mutual funds help you to reap the benefit of returns by a portfolio spread across a wide
spectrum of companies with small investments. Such a spread would not have been possible without their
assistance. Professional Fund Management: Professionals having considerable expertise, experience and
resources manage the pool of money collected by a mutual fund. They analyze markets and the economy to
select good investment opportunities.

Spreading Risk:An investor with a limited amount of fund might be able to invest in only one or two stocks /
bonds, thus increasing his or her risk. However, a mutual fund will spread its risk by investing in a number of
sound stocks or bonds, across sectors, so the risk is diversified, along with taking advantage of the position it
holds. Also in cases of liquidity crisis where stocks are sold at a distress, mutual funds have the advantage of
the redemption option at the NAVs (Net Asset Values). Transparency and easy access to information: Mutual
Funds regularly provide investors with information on the value of their investments. Mutual Funds also provide
complete portfolio disclosure of the investments made by various schemes and also the proportion invested in
each asset type and clearly layout their investment strategy to the investor.

Liquidity: Closed ended funds have their units listed at the stock exchange, thus they can be bought and sold
at their market value. Over and above this the units can be directly redeemed to the Mutual Fund as and when
they announce the repurchase.

Choice: The large amount of Mutual Funds offer the investor a wide variety to choose from. An investor can
pick up a MF scheme depending upon his risk / return profile.

Regulations: All the mutual funds are registered with SEBI and they function within the provisions of strict
regulation designed to protect the interests of the investor.
What are the various types of Mutual Fund schemes?

Broadly, there are two types of schemes available:

● Open-Ended Schemes
● Close- ended Schemes

Open Ended Schemes : Open-ended schemes usually do not have a fixed maturity period and are available
for subscription and redemption on an ongoing basis. The units can be bought and sold any time during the life
of the scheme at NAV-related prices. Open-ended schemes can issue and redeem units any time during the
life of the scheme. (Note: BSE StAR MF will accept all applications of those Open ended schemes that are
offered by the respective AMCs)

Close ended Schemes : Close-ended schemes cannot issue new units except in case of bonus or rights issue.
Hence, the number of units of an open-ended scheme can fluctuate on a daily basis while that is not the case
for close-ended schemes. Another way of explaining this difference is that new investors can join the scheme
by directly applying to the mutual fund at applicable net asset value related prices in case of open-ended
schemes while that is not the case in case of close-ended schemes, where new investors can buy the units
from secondary market only. (Note: Certain close ended schemes of AMCS are presently available for trading
on the BSE's BOLT (Equity segment)).

Bibliography

1) BSEIndia.in
2) Networkfp.com
3) Gettyimages.com
4) Wikipedia.com