India’s Securities and Exchange Board (SEBI) has proposed new reforms to simplify mutual fund fee structures and enhance cost transparency for investors.
Under the proposed rules, mutual funds will need to disclose a clear breakdown of all costs, excluding brokerage and taxes, which must be communicated upfront. The regulator also plans to reduce brokerage caps — from 12 basis points to 2 for cash market trades and from 5 to 1 for derivatives.
“The goal is to eliminate redundant rules and promote transparency, ensuring that investors know exactly what they are paying for,” SEBI stated in its consultation paper.
This marks a shift from SEBI’s 2023 approach that included such costs in total expenses — a move previously resisted by the ₹75.6 trillion ($860B) mutual fund industry.
The regulator also proposed that fund houses engaging in non-mutual fund management activities operate these through separate business units, with clear segregation of key employees to avoid conflicts of interest.
If implemented, these reforms could reshape India’s asset management landscape, fostering greater trust and investor protection in one of the world’s fastest-growing fund markets.