Sebi reduces cost for MF investors

New framework simplifies stock broker regulations

- NESIL STANEY

THE SECURITIES AND Exchange Board of India's (Sebi) board on Wednesday made sweeping changes in the expense ratio of mutual funds, removed obsolete regulations for stock brokers and allowed debt issuers to incentivise investors, among other measures.

However, the implementation of the high-level committee report on conflict of interest has been kept in abeyance for now, as the board felt that there should be a detailed discussion on this after sections of employees expressed concerns, and operational modalities.

The most significant change was in the mutual fund expense ratio. Mutual fund investors are expected to pay a lower expense now as the markets regulator has made a clear demarcation between statutory and regulatory levies, brokerage fees and the base expense ratio (BER). So, the total expense ratio will include BER, brokerage, regulatory and statutory levies.

Also, with the sharp cut in brokerage fees from 12 paise to 6 paise in the cash market and 5 paise to 2 paise in the derivative market (exclusive of levies), investors are expected to benefit.

However, the markets regulator has not unbundled research and brokerage, as proposed initially.