The Securities and Exchange Board of India (SEBI) has introduced major changes to mutual fund regulations. These changes aim to improve transparency, protect investors,
and strengthen governance within mutual fund companies. The new rules will come into effect from April 1, 2026.
Changes in Expense Structure of Mutual Funds
Under the new rules, SEBI has made important changes to how mutual fund expenses are charged. Mutual fund schemes will now be allowed to charge a base expense ratio linked to their performance.
However, schemes that choose this performance-based expense model must strictly follow SEBI’s expense structure and disclosure guidelines issued from time to time.
SEBI has also made it mandatory for mutual funds to clearly disclose total expenses in separate parts, making costs more transparent for investors.
Reduced Brokerage Limits and Clear Expense Disclosure
SEBI has reduced brokerage limits across markets. In the cash market, the maximum brokerage limit has been reduced to 6 basis points.
In the derivatives segment, the net brokerage cap has been lowered from 3.89 basis points to 2 basis points.
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 now be shown separately. The revised base expense ratio will only include fees charged by the asset management company for managing investors’ money.
Stronger Role for Trustees and Management
SEBI has expanded the responsibilities of trustees and key management personnel (KMPs). This move will improve supervision
and accountability within asset management companies and help strengthen overall governance standards.
SEBI Proposes Changes in Stock Market Rules
Apart from mutual fund regulations, SEBI has also proposed significant changes to the trading framework in the stock markets.
These proposals aim to simplify regulations, remove duplicate rules, and reduce compliance pressure on market participants.
These changes are part of SEBI’s larger effort to improve the ease of doing business in stock markets as well as commodity futures and options markets.
