Investors couldn't really buy the dip on 4 June. That's why we need to tokenise mutual funds

livemint.com:

Readers may recall the 4 June market correction when investors took advantage of the fall in prices and invested lumpsum amounts in mutual fund schemes?

However, much to their dismay, investors were allotted mutual fund units on the next day, 5 June’s prices, when markets had recovered around 3-4 percent.

As per norms, mutual fund units are usually allotted to investors at the NAV of the day on which the funds are received, before the applicable cut-off time. Reportedly, the delay on 4 June was due to heavy trade volumes and consequently, the delay in movement of funds between banks, exchanges and fund houses.

Though this problem reportedly affected only 2% of the total transactions, it nevertheless warrants a discussion on the tokenization of mutual funds, which would allow for instant allotment of mutual fund units at the desired prices to the investors.

To achieve this, mutual fund houses would need to select a blockchain platform and create digital tokens representing ownership of the units of the mutual fund scheme.

Once investors provide the required funds, they will be instantly allotted mutual fund tokens on the distributed ledger technology. This DLT allows peer-to-peer transactions—eliminating the requirement of traditional intermediaries such as banks, clearing corporations, etc.—thereby speeding up transactions and reducing costs.

Blockchain transactions are verified and authenticated by computers connected to the network, which ensures only valid and authorized transactions are permanently recorded.

A blockchain contains a digital record or ledger of transaction data that is permanently recorded in files called “blocks." In the event of a conflict between the blockchain record and the record held by the