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New Delhi: Now, for investors who want to invest in mutual funds but are in two minds on investing in the product through fund managers. Securities and Exchange Board of India, the market regulator, has decided to allow mutual funds to be traded on stock exchanges so that more investors can access them and have a basket of various categories of securities to get assured of maximum returns.

"It is a positive development and an enabling decision by Sebi for an additional way of buying mutual fund schemes. It will facilitate the geographical reach for mutual funds. However, the effectiveness of this channel for scheme distribution remains to be seen in the days ahead, said Dhirendra Kumar, Chief Executive of Value Research Online.

The guidelines are already there for sellers of mutual fund products. They include agents' qualifications, the investor redressal mechanism, stamping and also monitoring by Sebi for appointment of intermediaries for selling mutual fund products. With all this, stock brokers intending to extend the transaction in mutual funds through stock exchange mechanism need to comply with the requirements specified by Sebi for passing the Association of Mutual Fund Investors (AMFI) certification examination.

In the new system, investor grievance mechanism for stock exchanges shall provide for investor grievance handling mechanism to the extent they relate to disputes between brokers and their client in case of mutual funds.

This step has been taken with an aim to use the infrastructure of stock exchanges that already exists for the secondary market transactions in over 1,500 towns and cities, through over 2,00,000 stock exchange terminals, for facilitating transactions in mutual fund schemes.