Sebi Set to Revamp Mutual Fund Fees and Simplify IPO Disclosures

Big Changes Ahead for Mutual Fund Investors

The Securities and Exchange Board of India (Sebi) is planning to make significant changes to the fee structure for the mutual fund industry, which manages over ₹80 lakh crore in assets. The goal is to make mutual funds more transparent and cost-efficient for investors.

What's Changing?

• Total Expense Ratio (TER): Sebi has proposed reducing the TER across equity and debt funds by 15-20 basis points. This could lead to lower fees for investors.
• Brokerage Fees: The regulator has suggested lowering brokerage fees for cash market transactions to 2 basis points (bps) from 12 bps, and for derivative transactions to 1 bp from 5 bps.

However, not everyone is happy with these changes. Market intermediaries are resisting the proposed reduction in brokerage fees, saying it could harm their business.

Simplifying IPO Disclosures

Sebi is also planning to simplify initial public offering (IPO) disclosures by introducing a separate offer document summary. This will provide concise information about the issuer company, making it easier for retail investors to access key information.

The regulator is expected to discuss these proposals at its board meeting on December 17, along with other issues like conflict of interest rules for its top officials.

Industry Reaction

Anand Rathi, chairman of Anand Rathi Group, has expressed concerns about the proposed reduction in brokerage fees, saying it may not be in the best interest of investors in the long term.

As the regulator receives feedback from market participants, it will be interesting to see how these proposals shape up and what the final outcome will be.