The Securities and Exchange Board of India (SEBI) is set to deliberate significant changes to regulations governing mutual funds and stock brokers at its upcoming board meeting scheduled for December 17. These proposed reforms include a comprehensive review of the framework for mutual funds — such as clearer definitions of key cost metrics, disclosure obligations, and brokerage caps — alongside an overhaul of the long-standing rules that apply to stock brokerages.

Key Highlights

• SEBI will review major regulatory reforms affecting mutual funds, stockbrokers, governance and investor protection norms.
• The December 17 meeting may reshape compliance requirements, transparency standards and operational rules across markets.

On the mutual funds front, SEBI’s discussion will address how the Total Expense Ratio (TER) is defined, which costs should be included, and the elimination of an existing additional fee of 5 basis points that asset management companies (AMCs) currently charge across schemes. It also proposes excluding statutory levies — such as stamp duty, securities transaction tax (STT) and goods and services tax (GST) — from the TER cap, thereby enhancing clarity for investors on what they are actually paying for.

In parallel, SEBI plans to revisit its stock-broker regulations, which date back more than 30 years. Among the key changes under consideration is the introduction of a formal definition for “algorithmic trading” and updated compliance standards tailored to today’s digital and high-frequency trading realities. The regulator is also expected to review a high-level panel’s recommendations concerning conflict-of-interest controls among senior officials, including the establishment of an independent ethics officer, anonymous whistle-blower protections, restrictions on post-retirement assignments, and enhanced disclosure norms.

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The overarching aim of these reforms is to bring greater transparency, reduce redundant costs, simplify compliance burdens, and better align rules with current market practices. For investors, especially retail participants, the changes promise clearer cost structures and stronger protection. For intermediaries, the update reflects the need to evolve in an increasingly digital, complex and fast-moving financial ecosystem. If approved at the December board meeting, these regulatory changes could set a new course for India’s asset-management industry and brokerage sector.