Capital markets regulator SEBI has reduced the cap on brokerage fee charged by mutual funds on cash market transactions to 0.6 per cent (excluding levies) from 0.86 per cent (excluding levies).
Similarly, brokerage cap on derivatives trading was reduced to 0.2 per cent (excluding levies) from 0.39 per cent.
The new norms were cleared in the SEBI board meeting on Wednesday. SEBI wanted to reduce the cost charged on investors, as inflow into equity schemes have increased substantially in the last few months.
The existing brokerage cap on cash and derivatives market transactions was 0.12 per cent and 0.5 per cent including statutory levies.
Expense ratio limits will now be identified as Base Expense Ratio (BER) without statutory levies.
Statutory and regulatory levies such as STT/CTT, GST, Stamp Duty, SEBI Fees and Exchange Fees incurred for execution of trades will be charged on actuals, over and above permissible brokerage limits.
The Total Expense Ratio will now be the sum of BER, brokerage, regulatory levies and statutory levies.
The revised BER limits for funds investing over 65 per cent of AUM in equity-oriented schemes has been reduced to 2.10 per cent (excluding statutory levies) from 2.25 per cent (including levies).
The TER for passive funds has been reduced to 0.90 per cent (excluding statutory levies) from 1 per cent (including levies).
SEBI has also removed the additional expense of 0.5 per cent charged on schemes with exit loads.
In a bid to simplify operational and regulatory compliance, the regulator has rationalised reporting requirements such as fewer annual trustee meetings and removal of separate half-yearly portfolio disclosures.
To promote digital-first disclosures, it has discontinued physical submission of advertisements to SEBI following automation of online monitoring and email/ SMS communication and website disclosures in place of newspaper advertisements.
It has also streamlined borrowing framework such as enabling borrowing by equity-oriented index funds and equity-oriented ETFs for execution-related needs and allowed intra-day borrowing mechanisms to manage redemption-related timing mismatches.
Lighter rulebook
SEBI has also deleted redundant chapters/clauses such as the chapters on Real Estate Mutual Funds and Infrastructure Debt Fund schemes, as separate frameworks for such products already exist.
The review of existing regulations has resulted in a 44 per cent reduction in the size of the regulations from 162 pages to 88 pages. The word count has been reduced by about 54 per cent from 67,000 words to 31,000 words in the new draft.
The number of provisos have been reduced from 59 to less than 15 and all ‘notwithstanding’ clauses have been eliminated, except for its limited use under the ‘Repeal and savings’ provision.
The new SEBI (Mutual Funds) Regulations, 2026, approved by SEBI on Wednesday are designed to offer stakeholders greater clarity, improved readability and enhanced structural coherence.
Published on December 17, 2025