ETF Structure
Creation of Units:
Redemption of Units:
Benefits Offered by ETFs
- Instant exposure to a well-diversified portfolio or an asset class.
- Real-time buying and selling of ETF units throughout the trading hours just like any other equity Security.
- Most ETFs have a lower expense ratio than comparable mutual funds. Not only does an ETF have lower shareholder-related expenses, but because it does not have to invest cash contributions or fund cash redemptions, an ETF does not have to maintain a cash reserve for redemptions and saves on brokerage expenses.
- No sales load for investor. Only normal brokerage charges apply.
- Low tracking error- ETF's trade close to their NAV's unlike substantial premiums/ discounts associated with close-ended funds that trade on the bourses.
- Tax efficient instrument, capital gains taxes for investors of ETF tend to be much lower than those in mutual funds due to in-kind creation and redemption process.
Trading, Settlement & Risk Management
ETF’s trade just like any other normal listed security on the BSE, settlement is just like any other stock. In case an investor has purchased ETF from the market, he has to pay the broker before the pay-in on T+2 and in the case of sale, an investor has to transfer ETF units from his demat account to his brokers account before the settlement on T+2.
Cost
The transaction charges will be same as Equity segment .The fee structure have two components:
- For Passive Orders, defined as the orders already existing in the order book at the time of matching (trade taking place), the transaction charges will be reduced from Rs. 3.50 per Rs. 1, 00,000 to Rs. 2.25 per Rs. 1, 00,000 of gross turnover.
The transaction charges above will include current contributions of Rs. 0.01 each on Rs. 100,000 of gross turnover to the Trade Guarantee Fund and Investor Protection Fund. The differential transactions charges shall be applied uniformly across all valid orders executed in the BSE system.
The new structure will replace the transaction charges currently in practice and which were introduced via circular number 20030924-11, dated September 24, 2003.
To know more on the Transaction charges, please refer to the FAQs
Reference: no.
20091005-33 dated, October 05, 2009
Learn more about Mutual Funds/ETFs
The BSE Institute Ltd. is the learning solutions arm of the BSE Limited and it offers various courses including courses in Mutual Fund/ETFs. BSE Institute Ltd. inherits from BSE the knowledge and insights into the capital markets industry, garnered over the past 135 years.
BSE Institute Ltd. has the distinct advantage of being at the centre of action - the financial hub of India, one of the world’s most rapid emerging markets. This has helped us provide insights into the unique functions of this world. Emerging markets such as the BRIC countries - Brazil, Russia, India, and China - can entice and intimidate. However, the first hand experience of our faculty and subject matter experts in dealing with the realities of this market, enables us to appreciate how organizations, entrepreneurs, and investors identify and respond to these new challenges and opportunities.
Hence, our programs are designed to help learners develop an actionable framework to delve into key aspects like:
- Identifying which market institutions are working, and which institutions are missing?
- Which parts of our business model can be adversely affected by these institutional voids?
- How can we build competitive advantage based on our ability to navigate institutional voids?
- How can we profit from the structural reality of emerging markets by identifying opportunities to fill voids, serving as market intermediaries?
Our commitment to being at the forefront of the current and evolving practice of business has led to programs that reflect the realities of the marketplace.
Case studies replicate actual business situations and are taught so that students must work together to make difficult decisions under typical management conditions, including a lack of complete information, complex tradeoff situations and time pressure.
For more than two decades, the BSE Institute Ltd. faculty have drawn on their passion for teaching, their experience in working with organizations worldwide, and the insights gained from their experience to educate professionals who have shaped the practice of business in financial markets not only in India but also many other countries around the world.
Our course design and development is firmly grounded in knowledge of business processes - in entrepreneurial companies and established firms unconstrained by the boundaries of academic disciplines.
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