SEBI Overhauls Mutual Fund Rules: Boosts Transparency, Cuts Investor Costs

• SEBI approved a comprehensive overhaul of mutual fund regulations, aiming for greater cost transparency and reduced expense burden on investors.
• Key changes include excluding statutory levies (STT, GST, stamp duty, CTT) from Total Expense Ratio (TER) calculations; these will now be charged separately.
• Brokerage caps have been rationalized, with limits for equity cash transactions set at 6 bps and derivative deals at 1-2 bps, down from current higher rates.
• Base Expense Ratio (BER) limits are cut for index funds, ETFs (to 0.9%), liquid-scheme FOFs (to 0.9%), and close-ended equity schemes (to 1%).
• The new framework simplifies compliance, promotes digital disclosures, and allows equity-oriented index funds/ETFs to borrow for execution needs.

Why It Matters: SEBI's new mutual fund rules enhance transparency, lower investor costs, and simplify compliance.