The board of market regulator SEBI is scheduled to meet on Wednesday to discuss and possibly approve several important market-related proposals.
According to a report by Moneycontrol, the agenda includes a detailed review of mutual fund regulations, stock broker rules, and the ICDR framework.
Sources say these proposed changes aim to improve ease of doing business and encourage greater participation from retail investors.
Proposed Changes in Mutual Fund Rules
SEBI may consider a proposal to cap brokerage fees paid by asset management companies (AMCs) under mutual fund regulations.
In a consultation paper, SEBI suggested cutting brokerage fees in the cash segment from 12 basis points to 2 basis points, and in the derivatives segment from 5 basis points to 1 basis point.
Institutional brokerages and AMCs have supported this proposal and have been seeking such relief.
The board may also revisit earlier proposals to reduce the total expense ratio (TER). These included a cut of 15 basis points for open-ended mutual fund schemes and 25 basis points for closed-ended schemes.
Review of Stock Broker Regulations
As part of the review of stock broker rules, SEBI said the proposals are aimed at simplifying compliance, lowering costs, strengthening investor protection, and aligning the regulations with the Companies Act, 2013.
For the first time, algorithmic trading has been formally defined, and the definition of proprietary trading has also been clarified.
Other suggestions include allowing stockbrokers access to the NDS-OM platform for trading government bonds and identifying an execution-only platform for digital platforms offering direct mutual fund plans.
Possible Changes in IPO Rules
The SEBI board may also consider changes to IPO-related regulations. These may include addressing issues related to IPO lock-in periods and simplifying disclosure requirements.
SEBI could amend ICDR rules to allow pledged pre-issue shares to be marked as locked-in through technological systems.
In addition, there is a proposal to replace the current abridged prospectus with a simplified offer document summary of 15 to 20 pages, making it easier for investors to understand.
Other Important Proposals Under Consideration
The meeting may also discuss changes to the conflict of interest code for SEBI board members and officials. Measures to simplify the demat and transfer process of old physical shares deposited before April 1, 2019, are also likely to be reviewed.
Another proposal under consideration is allowing incentives in public debt issues. This could include offering higher coupon rates or discounts to senior citizens, women, armed forces personnel,
and retail investors. Additionally, SEBI may consider expanding the role of credit rating agencies and allowing them to rate financial instruments currently regulated by other authorities.
