SEBI to make small SIP more effective: TK Pandey

SEBI Chairman Tuhin Kanta Pandey said on Friday that the debate over whether securities transaction tax (STT) should be a part of total expense ratio (TER) has been there for years. He was referring to the market regulator’s move this week to propose a host of changes in the mutual fund regulation framework. In a first such exercise in almost three decades, the market watchdog has proposed a detailed overhaul to make mutual funds easier to understand and more transparent for investors. The whole purpose of the exercise, he said, is to bring transparency to investors.

Investors should know the exact cost in a transparent way, he said.

Key proposals include a simpler total expense ratio framework in which brokerage costs, like GST and STT, will no longer be included in TER, with asset management companies (AMCs) required to provide a clear cost break-up. AMCs will be allowed to charge a higher TER only if they outperform their benchmarks.

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The fee structure should not have any ambiguity, said the SEBI chief. He was speaking at an event in Mumbai. A draft is a practical way of reconciling industry and investors, he said, referring to a consultation paper issued on October 28.

Another aim of the consultation paper, he said, is to remove overlapping and redundancy in the MF industry.

He also said that SEBI is working to make small SIPs more effective. In January, SEBI launched a consultation paper to introduce the concept of small-ticket SIPs with a minimum investment of Rs 250.

The move is aimed at promoting financial inclusion by making mutual fund investments more accessible to small and new investors across the country.

Pandey said the market regulator will implement any changes to the futures and options (F&O) segment in a phased and calibrated manner.

Emphasising that a halt to the weekly expiries is not under consideration, he said: “We cannot just shut down weekly F&O expiries.”

Many market participants are actively using them, he said.

In order to evaluate the wider market impact of F&O trading patterns, the SEBI chief said the regulator is gathering and analysing a large amount of data on these patterns. “It’s a sensitive thing,” he said.

He also said that the regulator has already implemented some measures in the derivatives sector, some of which have not yet gone into effect.

Speaking about the long-awaited IPO of stock exchange NSE, the SEBI chairman said the public offer will see the light of the day, expressing hope that the long-pending listing could move forward soon.