The Securities and Exchange Board of India has said there is no change in the regulatory framework for short selling, countering reports that suggested new rules would take effect from December 2025.
Mumbai: The Securities and Exchange Board of India (SEBI) on Sunday clarified that there has been no change in the existing regulatory framework for short selling, dismissing reports suggesting that revised rules would come into force from December 22, 2025.
In a statement, the market regulator said a media report had incorrectly claimed changes to the short-selling framework, and reiterated that current regulations continue to remain in force.
Separately, SEBI recently approved a comprehensive overhaul of mutual fund regulations aimed at improving cost transparency and reducing the expense burden on investors. The reforms, cleared by the SEBI Board, will be implemented through the new SEBI (Mutual Funds) Regulations, 2026, replacing the existing 1996 framework following an extensive review.
A key feature of the reform is a restructuring of the Total Expense Ratio (TER) framework. SEBI has approved the exclusion of statutory and regulatory levies, such as Securities and Commodities Transaction Tax (STT/CTT), GST, stamp duty, SEBI fees and exchange charges, from TER calculations. These charges will now be levied on actuals, over and above the Base Expense Ratio (BER), providing investors with greater clarity on fund management costs.
Under the revised framework, TER will consist of three components: base expense ratio, brokerage costs, and statutory or regulatory levies. SEBI has also withdrawn the additional 5 basis points (bps) expense allowance previously linked to exit loads.
The regulator has tightened brokerage-related norms while fine-tuning earlier proposals. For equity cash market transactions, mutual funds will be permitted to pay brokerage of up to 6 bps, higher than the earlier proposed 2 bps but significantly lower than the existing cap of 12 bps. For derivative transactions, brokerage has been capped at 2 bps, excluding statutory levies.
SEBI has further approved stricter limits on distribution commissions and allowed performance-linked expense structures for select mutual fund schemes, subject to regulatory safeguards.
In addition, the Board cleared reductions in base expense ratio limits across multiple categories. The BER cap for index funds and exchange-traded funds (ETFs) has been lowered to 0.9 per cent from 1.0 per cent, with a similar cut for liquid-scheme-based fund of funds. For close-ended equity schemes, the cap has been reduced to 1.0 per cent from 1.25 per cent.
According to SEBI, the revised regulations are designed to better align mutual fund expenses with actual costs, enhance transparency and strengthen investor protection across the mutual fund industry.
IANS
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