Sebi lowers MF fee cap, investors set to pay less

Mumbai: Mutual fund investors will soon pay less to fund houses that manage their money. Markets regulator Sebi on Wednesday reduced the maximum fee that fund houses charge their investors by up to 15 basis points (100 basis points = 1 percentage point) in select MF schemes.

Sebi also reduced the maximum brokerage that fund houses can pay to brokers for their trades in equity, futures & options, and debt markets. In turn, this could also lead to cost reduction for MF investors.

The regulator, however, said that from now on all statutory charges, like GST, exchange fees, securities transaction tax (STT) etc, would be exclusive of the fees that fund houses charge their investors. Earlier, these charges were part of the fees that fund houses charged their investors.

The board also reviewed and made wide-ranging changes to regulations for stock brokers and mutual funds. Changes in stock brokers’ regulations were necessitated by contemporary changes in the industry, the regulator said. The objective of the changes include streamlining regulations to ensure simple and clear language, omission of repetitive and redundant provisions and modification/inclusion of certain provisions to provide more clarity and to ensure ease of compliance, a Sebi release said.

Sebi is also bringing in a new set of regulations for the MF industry next year. The new regulations “are designed to offer stakeholders greater clarity, improved readability, and enhanced structural coherence. While simplifying compliance, the revised framework retains the core principles, safeguards, and regulatory intent built over the years, and further strengthens investor protection, transparency, and governance standards within the mutual fund ecosystem,” the Sebi release said. The MF regulations are being changed after 30 years, it said.

The board also cleared a proposal to simplify the offer document for public offers and said a shorter summary of the document should accompany the draft offer document. This is aimed at enabling investors to make informed decisions relating to all public offers, the release said. The Sebi board also gave its nod to a proposal to offer incentives to some investors in public issues for debt offerings. To reduce compliance burden for companies, Sebi also said that for companies with large debts, the threshold for identifying it as a High Value Debt Listed Entities (HVDLEs) would be enhanced to Rs 5,000 crore, from Rs 1,000 crore now.

The board also reviewed recommendations of its high-level committee on conflict of interest of its top officials, and also disclosures of assets by those officials, but deferred any decision on the same.