3.1 Types of Transaction Requests

This topic provides information on types of transaction requests in detail.

For more information on Types of Transaction Requests, refer the below table.

Table 3-1 Types of Transaction Requests

Field	Description
IPO Subscription and Subscription	When an investor chooses to invest capital into a fund, the investment is typically made by ‘buying’ units in the fund. This is also known as subscribing into the fund. The investor can subscribe to a fund either during its Initial Public Offering (IPO) Period, or later. If the subscription is made during the IPO Period, the resulting transaction is an IPO subscription transaction, and the unit price for these transactions is fixed, generally the par value of the units, and not dependent on the prevalent net asset value for the fund. If the investor’s subscription is made after the initial IPO Period, the resulting transaction is known plainly as a subscription transaction, and the unit price for these transactions will vary on a fixed frequency basis, depending upon the prevalent net asset value of the fund.
Redemption	When an investor decides to pull investment out of a fund (or disinvest in a fund), the units held by the investor are sold back to the fund (redeemed) at the prevalent Net Asset Value on the date of sale. This kind of a transaction is known as a redemption transaction. An investor can redeem all the holdings (complete redemption) or part of the holdings (partial redemption) While redeeming or selling back units to the fund, the investor recovers the value of the holdings in the fund at that given point in time. It also means that the fund buys back its units from the investor. An investor can redeem a specified number of units, or a specified amount, or a specified percentage of the holdings in any fund. The fund may also prompt the investor to partially redeem the holdings under the following circumstances: The minimum registered capital has fallen below the minimum limit defined for the fund in the fund rules. In such a case, the redemption transaction is not allocated at all. The fund investor category limit falling down to the minimum limit defined for the fund in the fund rules. Partial redemption may also occur due to other prevailing circumstances. The AMC can set a limit on the total volume of redemption transactions that would be accepted for a fund on a given business day. The limit could be specified in terms of a percentage or an amount. Redemption transactions that are requested which result in exceeding the limit set for the fund will not be accepted, in such a case. In the system, if the investor’s balance reduces to zero as an account of a redemption transaction, the investor’s account will be marked as pending closure.
Redemption through check writing	An investor may also request for the check writing facility, for usage of holdings in any of the funds. In such a case, a checkbook is issued to the investor for each fund. The investor may issue checks for payments, to any third party. When these checks are presented at the specified bank, they are sent to the appropriate clearing house. The bank then sends a file to the AMC, containing used check information from the clearing house. When the AMC receives details of used checks from the bank, a redemption transaction is initiated in the investor’s account, and units are redeemed in the fund for which the checkbook was issued, to the extent of amount used on each check. No payment details are required for such redemption transactions.
Switch	An investor may choose to switch the investment in one fund, to another fund, for any reason. This would mean redeeming the investment in one fund and investing this redeemed capital in the other desired fund. This kind of exchange or switch is called a switch transaction. In the system, a switch transaction is processed as two separate transactions, the first involving a redemption from the first fund, and the second involving a subscription to the second fund. The switching facility in the system provides for switching either between funds in the same fund family, or between any two funds of the AMC. Switching within the same fund is defined as Bed and Breakfast switch (the Switch from fund and the Switch to fund in a switch transaction is same).
Transfer	An investor may choose to transfer ownership of holdings in any fund to another investor. This kind of a transfer of ownership is called a transfer transaction. A transfer transaction is different from a switch transaction in the sense that in a transfer transaction, the fund remains the same whereas the unit holder changes.
Block / Unblock	Typically, when lien is noted in respect of an investor’s holdings in a fund either in part or entirely, the concerned units are said to be blocked. These blocked units are subsequently (and temporarily) unavailable to the investor for further transacting. Blocking of units could also occur due to any reason other than lien noting. The process of blocking units is called a block transaction. To release the blocked units for further transacting, the investor must ‘unblock’ these units, or the lien must be lifted. This is known as an unblock transaction.
Split / Consolidation / Reissue	In certain funds, the investors receive certificates that are representative of their holdings (investment units) in the fund. These funds are called scrip-based funds. In certain funds, the investors are given units for their investment in the fund, without certificates. These funds are called scrip-less funds. In certain funds, the investor is given the option of requesting for certificates. If the investor chooses to receive certificates, then the fund furnishes the same. If not, then no certificates are issued. Such funds are termed as certificate-option funds. In scrip-based funds and certificate option funds where certificates have been requested for, an investor may choose to: Split a single certificate into certificates of smaller denominations, resulting in a split transaction. Merge many certificates of smaller denominations into a single certificate of their total denomination, resulting in a consolidation transaction. Seek a reissue of certificates for reasons of losing a certificate or mutilation of certification etc, resulting in a reissue transaction. In such an event, the reissued certificates are printed with a ‘Duplicate’ tag on them.

The FCIS system provides the facility to process any of the transaction types enumerated above.