Federation of Independent Financial Advisors Flags Data Breach Risks Related To NSE’s Mutual Fund Platform

Mutual funds are witnessing strong investor interest, with systematic investment plan (SIP) inflows touching an all-time high of approximately Rs 28,464 crore in July 2025. Amid this rising investor interest, the Federation of Independent Financial Advisors has cited several challenges related to the National Stock Exchange’s (NSE) mutual fund platform.

The federation has cited issues ranging from data security, client mapping and other payment- and banking-related issues. Notably, the NSE Mutual Fund platform is used by market intermediaries, such as mutual fund distributors (MFDs), sub-brokers, and independent financial advisors. The intermediaries use the platform for the execution of mutual fund transactions, redemptions, switches and other mutual fund-related functions. The federation further mentioned in its post that mutual fund distributors are finding the platform ‘complicated’. The post also tagged Ashishkumar Chauhan the chief executive officer (CEO) of NSE.

“Dear Mr Chauhan, MFDs find the new NSE MF Platform complicating transactions and servicing,” the federation wrote in a post on social media platform X (formerly Twitter).

Data Breach And Privacy Concerns

The federation highlighted challenges, such as data breaches and privacy concerns with relation to the NSE mutual fund platform. It said investors have not been mapped correctly to brokers. As such, clients are visible to not only the main broker but sub-brokers as well, resulting in data breaches. These data breaches are likely to expose sensitive financial information about investors. This in turn can lead to an increase in fraudulent activities, such as unauthorised account changes or transactions, it added.

The federation mentioned that the previous platform maintained client segregation and the details of investors would only be shown to the intermediaries they were mapped to. Another issue cited by the federation related to the inability to assign login IDs to sub-brokers.

“As a result, we are unable to provide login IDs to the sub-brokers, bringing transactions to a standstill,” it said.

Processing Of Transactions

The federation also cited issues with the new platform regarding the processing of transactions. It said once transactions are completed, confirmation emails are not sent automatically to users; instead, each transaction has to be manually verified in the Order Life Cycle Report by the distributor.

It also highlighted problems in processing redemptions and switches made by mutual fund investors. Additionally, SIP and systematic transfer plan (STP) transactions are also restricted to one scheme at a time. “For redemptions, switches, and SIP/STP orders, multiple links are generated instead of one consolidated link. SIP/STP/Redemption/Switch transactions are restricted to one scheme.

At a time, unlike earlier when multiple schemes were allowed under one order. No re-send option for STP/SWP transactions; the entire transaction has to be re-initiated if a link expires or fails,” it said in the post.

It additionally highlighted the reduced validity for extended payment links from 48 hours to 24 hours and the inability to use Netbanking facility of certain banks, such as HSBC.

Other Concerns

Other problems with the NSE MF platform listed by the federation include the lack of email-based intimation for mutual fund distributors. The organisation stated that distributors are not receiving mail for SIP bounce, SIP renewal, transaction rejection and other such functions.

It also highlighted challenges related to the migration of Unique Client Codes (UCCs). Notably, UCCs refer to an alphanumeric code assigned to investors by the Securities and Exchange Board of India (Sebi) for tracking their activities. It said that for migrated UCC client codes, other linked details, such as gender and state name are not there, and nominee addresses are incomplete or mismatched.

The federation further expressed concern regarding a lack of clarity related to the on-boarding process for non-individual clients and handling joint holder transactions.

The federation also highlighted challenges related to the Issuer Identification Number (IIN) numbers. It said several issues related to the IINs being manually fed increased the scope for error and ultimately increase the time required for processing transactions, causing delays for investors.

Other problems listed by the organisation in the social media post include issues related to mutual fund folios not being linked to IINs automatically, requiring manual inputs for redemption orders, leading to further delays.