Sebi's Bold Overhaul: Streamlining Mutual Fund Regulations

The Securities and Exchange Board of India (Sebi) has unveiled a comprehensive plan to revamp mutual fund regulations, marking a significant shift in the sector. The initiative includes a clearer definition of Total Expense Ratio (TER) and revised brokerage charges, aimed at reducing redundancies and simplifying compliance.

Under the proposed framework, Sebi intends to remove the additional 5 basis points (bps) charge previously allowed for asset management companies (AMCs) across mutual fund schemes. Initially introduced in 2012 to offset exit load impacts, the expense is now deemed unnecessary, and its removal reflects Sebi's commitment to rationalizing costs for unitholders.

Further proposed changes include a revision of brokerage fees to enhance transparency. Sebi also plans to exclude all statutory levies from TER limits and propose a performance-based expense ratio option for AMCs. The proposed reforms demonstrate a proactive approach to fostering clarity and investor protection.