Securities and Exchange Board of India (Sebi) Revamps Mutual Fund Regulations and Rationalises Brokerage Caps

Key facts

• The Securities and Exchange Board of India (Sebi) has notified revamped Mutual Fund Regulations that will come into effect from April 1, 2026.
• Sebi has introduced a provision allowing mutual fund schemes to charge a base expense ratio (BER) linked to the performance of the scheme.
• The new regulations introduce the concept of a base expense ratio (BER) which represents only the fee charged by an Asset Management Company (AMC) for managing investors’ money.
• Levies such as brokerage, securities transaction tax, stamp duty, and exchange fees must now be disclosed separately rather than being aggregated under the total expense ratio.
• The brokerage ceiling in the cash market has been reduced to 6 basis points (bps) from an effective 8.59 bps.
• The net brokerage cap in the derivatives segment has been lowered to 2 bps from 3.89 bps.
• The framework expands the responsibilities of trustees and key managerial personnel to tighten oversight and reinforce governance standards across AMCs.