The biggest overhaul of India's mutual fund, broker rules may be around the corner

Subscribe to enjoy similar stories. The board of India's stock market regulator will take up the most sweeping revision of regulations in decades spanning mutual funds, stock brokers and its own officials later this month, two people aware of the meeting's agenda said. The board will discuss bringing in new rules, updating outdated rules, and removing overlapping ones.

In October, the Securities and Exchange Board of India (Sebi) proposed to cap brokerage and transaction costs that mutual funds charge beyond annual fees collected under their total expense ratio (TER). Sebi also proposed to scrap the additional five basis points charged over the exit load and a more comprehensive disclosure of the TER, which is used to cover management and operating costs. “Mutual fund regulations and stock broker norms will definitely be part of the Sebi agenda," one of the two people cited above said on the condition of anonymity.

The regulator's board will meet on 17 December. A Sebi spokesperson did not respond to Mint's queries. The proposed overhaul of mutual fund regulations aims to improve transparency in costs and charges levied by mutual funds; however, the regulator's October suggestions drew criticism from asset management companies (AMC), who claim lower brokerage will squeeze income, affect research work, and lead to loss of block deals from brokers.

Meanwhile, mutual fund distributors worry that AMCs will pass on some of the pain, shrinking their own income. "If the recommendations on brokerage costs are accepted as it is, then it would have an impact on AMCs. But we are expecting Sebi to come mid-way," an AMC official said on the condition of anonymity.