SEBI has announced major changes in mutual fund rules to make investing more transparent and investor-friendly.
These new regulations are aimed at improving governance, reducing hidden costs, and strengthening oversight of fund houses.
The revised rules will come into effect from April 1, 2026.
Here’s a simple explanation of what’s changing and how it may affect investors.
New Rules for Mutual Fund Expenses
SEBI has made important changes to how mutual fund expenses are calculated and disclosed.
Mutual fund schemes will now be allowed to charge a base expense ratio linked to their performance.
However, schemes that choose this option must strictly follow SEBI’s expense structure and disclosure guidelines.
Another key change is clear and detailed disclosure of total expenses.
Instead of showing all costs under one head, fund houses will now have to break them up, making it easier for investors to understand where their money is going.
Brokerage Limits Reduced
SEBI has also lowered brokerage limits to reduce trading costs.
In the cash market, the maximum brokerage has been reduced to 6 basis points
In the derivatives segment, the brokerage cap has been cut from 3.89 basis points to 2 basis points.
This move is expected to help lower overall costs for mutual fund investors.
Clear Separation of Fund Management Fees
Earlier, costs such as brokerage, securities transaction tax (STT), stamp duty, and exchange fees were included in the total expense ratio (TER).
Under the new rules, these expenses must be shown separately.
The base expense ratio will now reflect only the fees charged by the asset management company for managing the fund.
This brings more clarity and allows investors to compare funds more accurately.
Stronger Role for Trustees and Management
SEBI has expanded the responsibilities of trustees and key management personnel (KMPs).
This step will increase accountability within asset management companies and ensure stronger monitoring and better governance, offering greater protection to investors.
Proposed Changes in Stock Market Rules
Along with mutual fund reforms, SEBI has also proposed simplifications in stock market trading rules.
The focus is on removing duplicate regulations, easing compliance requirements, and improving the ease of doing business in stock and commodity derivatives markets.
These proposals are part of SEBI’s larger plan to make Indian financial markets more efficient and investor-friendly.
