The settlement for Mutual Funds Service System is carried out by NSE CLEARING through the depository and bank interface.The clearing and settlement mechanism provides for settlement of funds and mutual fund units in case of subscription and redemption orders. The transfer of funds and units in respect of redemptions and subscriptions, respectively, is effected to the broker/Clearing Members' settlement / pool account. Investors receive redemption amount (if units are redeemed) and units (if units are purchased) through broker/clearing members' pool account.
All requests for subscription and redemption are settled on individual basis and only to the extent of the funds/units paid in by participants/clients on the settlement day. Receipt and transfer of funds and units for subscription are done on a T+1 day basis. . Receipt and transfer of mutual fund units for redemption is done on T day and is conducted for units in dematerialised form only. The transfer of funds for redemption is carried out on a T+1, T+2 and T+3 basis depending upon the category of funds.
The settlement cycles are in accordance with the settlement schedules issued by NSE CLEARING from time to time.
NSE CLEARING is only a facilitator and not a counter party for the subscription and redemption of units.
Subscription of units
- Participants have to open a separate clearing bank account for the purpose of settlement of funds for subscription.
- The depository pool accounts of the Participants in the cash segment are used for the purpose of settlement of subscription units.
- Funds pay-in confirmation files are downloaded to participants on the T day for units subscribed.
- Participants have to provide funds in their settlement accounts by 8.30 a.m. on the T+1 day.
- Participants have to upload payment confirmation files on the T+1 day by 9.30 a.m. identifying transactions for which payments have been received and transactions for which payments have not been received. Wherever the funds collected from the bank account fall short of the amount indicated in the details provided by the participant, the details are considered defective and are not further processed. In such cases, the funds collected, if any, are returned to the designated bank account of the participant.
- A client-wise receivable obligation report (DLVR) is downloaded to participants on T+1 day for units allotted under subscription.
- A Demat Final Receipt Statement (DFRS) is downloaded to Participants after the release of payout of subscription units to their respective pool accounts on the T+1 day.
Redemption of units
Investors are required to transfer units for their transacted orders to the NSE CLEARING pool account on the T day by 4.30 p.m. under settlement type “U” (Normal Redemption). The details on such instructions and settlement procedure of redemption orders are given in the circular NSE/CMPT/16506 dated December 10, 2010 and NSE/CMPT/18823 dated September 08, 2011 respectively.
- Demat Final Delivery Statement (DFDS) is downloaded to Participants on the T day after units are received by NSE CLEARING.
- A client-wise funds receivable obligation report (FNDS) is downloaded to Participants on T+1 day for redemption proceeds receivable on the T+1 , T+2 and T+3 days.
- Funds payout for redemption is effected to the Participants' clearing bank account as per the settlement schedule issued for the various settlement types.
Daily funds report is downloaded to participants after completion of funds settlement for subscription and redemption of mutual fund units.
Participants can refer to the circulars mentioned above for detailed clarifications in relation to clearing and settlement procedures of mutual funds units.