Sebi overhauls MF charges, removes exit load

Introduces abridged IPO prospectus; approves tighter caps on brokerage and mutual fund distribution commissions

- BENN KOCHUVEEDAN @ Mumbai

THE Securities and Exchange Board of India (Sebi) has overhauled the mutual fund regulations penned way back in 1996 to improve cost transparency and reduce expense burden on investors.

The regulator also made seven other changes for the capital markets including introduction of an abridged IPO prospectus, a complete overhaul of the 1992 broker regulation among others.

The Sebi board meeting here on Wednesdayfourth one since new chairman Tuhin Pandey took over in Marchreplaced total expense ratio (TER) framework with a base expense ratio (BER), which excludes all statutory levies such as securities transaction tax (STT), GST, stamp duty and commodities transaction tax from calculations. These fees will be charged separately from the investors. The TER was inclusive of these statutory duties and levies. The board has also approved tighter caps on brokerage and distribution commissions, and allowed performance-linked expense structures for certain schemes. The new MF regulations will be shorter - only 88 pages and 31,000 words long compared to the old one, which ran into 162 pages or 67,000 words.