Securities and Exchange Board of India (SEBI) overhauls mutual fund regulations and cuts expense ratio limits

Key facts

• Total Expense Ratio shall now be the sum of BER, brokerage, regulatory levies and statutory levies.
• Base expense ratio limits for equity-oriented schemes and other than equity oriented schemes under various AUM slabs have been cut by up to 15 basis points.
• Base expense ratio limit for index funds or ETF revised to 0.9 per cent from 1 per cent.
• Close-ended equity-oriented schemes BER limit now stands at 1 per cent as against 1.25 per cent.
• Maximum brokerage fee that mutual funds pay on cash market transactions halved to 6 bps from 12 bps.
• Brokerage cap for derivative transactions revised downwards to 2 bps from 5 bps, excluding applicable levies.
• SEBI removed the additional 5 bps expense allowance currently permitted to be charged to schemes with exit loads as a transitory measure.