SEBI Expected to Modify Mutual Fund Expense Ratio Proposals After Stakeholder Input

2 min read Updated on 17 Dec 2025, 12:59 PM

Reviewed by

Radhika SScanX News Team

Overview

SEBI plans to modify its mutual fund expense ratio proposals based on stakeholder feedback, showing regulatory flexibility. The original framework included business structure separation, enhanced trustee oversight, TER restructuring, brokerage fee reductions, and performance-based fees, with final regulations expected to incorporate industry input for smoother implementation.

*this image is generated using AI for illustrative purposes only.

The Securities and Exchange Board of India (SEBI) is expected to introduce small changes to its mutual fund expense ratio proposals after considering feedback from stakeholders, according to CNBC TV18 reports. This development indicates the regulator's willingness to incorporate industry concerns while finalizing significant regulatory changes for the mutual fund sector.

Regulatory Flexibility on Proposals

The latest update suggests SEBI is taking a collaborative approach by reviewing stakeholder feedback before finalizing the expense ratio regulations. This indicates potential modifications to the original proposals outlined in consultation papers, reflecting the regulator's consideration of industry perspectives.

Update Details	Information
Expected Changes	Small modifications to original proposals
Basis for Changes	Stakeholder feedback consideration
Source	CNBC TV18
Approach	Collaborative regulatory framework

Original Regulatory Framework Under Review

SEBI had initially proposed several major changes to mutual fund operations:

Business Structure Separation: Requirements for non-mutual fund activities to operate as separate business units with clear operational barriers.
Enhanced Trustee Responsibilities: Mandated trustee oversight for fees and resource allocation in non-mutual fund services.
Total Expense Ratio (TER) Restructuring:
- Exclusion of brokerage fees from total expense ratio calculations
- Proposed exclusion of taxes and statutory fees from TER
Brokerage Fee Adjustments: Reduction of brokerage fees for funds from 12.00 basis points to 2.00 basis points for cash market transactions.
Performance-Based Fee Structure: Introduction of optional expense ratios linked to fund performance metrics.

Stakeholder Engagement Impact

The regulator's decision to consider stakeholder feedback demonstrates SEBI's commitment to balanced regulation that addresses industry concerns while maintaining investor protection objectives.

Stakeholder Category	Potential Benefit
Asset Management Companies	Input consideration in final regulations
Investors	Balanced approach to cost optimization
Industry Participants	Collaborative regulatory development
Market Infrastructure	Smoother implementation process

Implementation Outlook

With SEBI expected to incorporate stakeholder suggestions, the final regulations may feature refined approaches to expense ratio management and operational requirements. The small changes being considered could help address practical implementation concerns while maintaining the core objectives of enhanced transparency and cost efficiency in the mutual fund industry.

This collaborative regulatory approach suggests SEBI's commitment to creating a framework that balances investor protection with industry operational realities, potentially leading to more effective implementation of the expense ratio regulations.

Institutional Brokerages Voice Concerns Over Proposed Mutual Fund Brokerage Cap Reduction

1 min read Updated on 26 Nov 2025, 03:17 PM

Reviewed by

Radhika SScanX News Team

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Overview

Representatives from domestic and global institutional brokerages met with SEBI officials to discuss proposed reductions in brokerage charge caps for mutual funds. The meeting aimed to express industry concerns about potential impacts on revenue structures, competitive dynamics, and investor costs in the mutual fund sector. The outcome of these discussions could significantly influence brokerage practices in India's mutual fund industry.

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Representatives from several domestic and global institutional brokerages recently met with officials from the Securities and Exchange Board of India (SEBI) to discuss proposed changes to brokerage charge caps for mutual funds.

Key Points of the Meeting

Participants: Representatives from a dozen domestic and global institutional brokerages
Purpose: To express concerns regarding the proposed reduction of brokerage charge caps for mutual funds
Significance: Highlights industry response to potential regulatory changes that could impact brokerage revenue structures in the mutual fund sector

Implications for the Mutual Fund Industry

The meeting underscores the potential effects of SEBI's proposed regulatory changes on the mutual fund landscape in India. A reduction in brokerage charge caps could have implications for:

Revenue Structures: Institutional brokerages may face pressure on their earnings from mutual fund-related activities.
Industry Dynamics: The proposed changes could alter the competitive landscape among brokerages operating in the mutual fund space.
Investor Costs: Lower brokerage caps might affect costs for mutual fund investors.

Looking Ahead

As the regulatory body responsible for overseeing and regulating securities and commodity markets in India, SEBI's decisions are significant for the industry. The outcome of these discussions could influence brokerage practices in the mutual fund industry.

It's important to note that while this meeting represents a step in the regulatory process, the final decision on brokerage charge caps remains with SEBI. Stakeholders across the mutual fund ecosystem will be monitoring further developments on this matter.