ASX's mFund and the Best Interests Duty

• Published date: 07 March 2014
• Law Firm: K&L Gates LLP
• Author: Jim Bulling,Daniel Knight

With the Australian Securities Exchange (ASX) set to launch its mFund settlement service in the first half of 2014, investment platform providers and financial advisers need to spend some time coming to grips with the potential implications. mFund will be an online portal and settlement service, making it easier for investors to apply for interests in unlisted managed funds and then manage their investments. It is an obvious competitor to traditional platforms, even though the ASX itself insists that they are potential partners rather than adversaries. The potential impact on advisers will be more subtle. They will need to consider when mFund, rather than a traditional platform, will be in their clients' best interests.

mFund Features

Designed to leverage the simplicity of buying shares through the ASX, mFund aims to make it easier for investors to directly buy interests in unlisted managed funds. Applications and unit pricing will still be handled by the fund managers, but the processes will be streamlined through mFund's central portal. mFund will provide access to current Product Disclosure Statements (PDSs), historical unit price data and other information for all available funds. Following some relief from the Australian Securities and Investments Commission (ASIC), paper applications will not be required, as all orders can be placed electronically.

Initially, only 'simple' funds (which use the eight page shorter PDS regime) will be available through the service, but the ASX intends to expand it to include more complex products over time. Some 65 fund managers have signed as foundation members, with more to be added after the launch.

mFund will utilise the existing Clearing House Electronic...