Sebi's fee reset proposals hit AMC, brokerage stocks

UNDER STRESS

- NESIL STANEY

THE SECURITIES AND Exchange Board of India’s (Sebi) latest proposals to revamp the fee structure by rationalising the total expense ratio (TER) and brokerage fees badly hit stocks of asset management companies, brokerages and mutual fund distributors on Wednesday.As many as 12 such stocks fell more than 5% intra-day.

“Overall, for an asset management company, the hit in the profit due to the changes proposed in TER may be to the tune of 4-6 bps,” said the CEO of a fund house.

Another worry is that the proposal will sharply reduce brokerage costs — the cost that fund houses incur when they buy or sell securities. Sebi has proposed to bring those down from the current high of 12 bps and 5 bps in cash and derivatives markets to 2 bps and 1 bps, respectively.