The new framework reorganizes broker regulations into eleven chapters, consolidates rules previously scattered across circulars, updates key definitions such as proprietary trading and clearing members, and removes references to practices that are no longer relevant such as the physical delivery of shares. Sebi said the revised regulations reduce the length of the rulebook by almost half and are expected to improve clarity for both brokers and investors.Also read: Easier to read offer documents, stricter lock-in rules: What Sebi approved for IPO investors
The board also approved a complete rewrite of mutual fund regulations, paving the way for the new Sebi (Investment Funds) Regulations, 2026.
While the core investor protection framework remains unchanged, the revised rules simplify language, consolidate provisions and strengthen transparency. An important change is the revision of the framework for expense ratios.
Sebi has renamed the expense ratios as the Base Expense Ratio and clarified that statutory levies such as GST, stamp duty and transaction tax will now be charged separately on the actual amounts. At the same time, base expense limits for equities, debt, index funds, ETFs and funds of funds have been reduced as assets under management increase. Under the new framework, the regulator has reduced the base expense ratio for close-end equity plans to 1% from 1.25%, and for close-end non-equity plans to 0.8% from 1% earlier. For index funds and exchange-traded funds, the BER will be reduced from 1.00% to 0.90%, while funds of funds that invest in liquid index ETFs will also have a limit of 0.90%.
Also read: Sebi approves new regulations for stockbrokers to simplify compliance framework. 10 Key Takeaways
Broker limits for cash and derivatives transactions have also been reduced and certain temporary expense allowances have been eliminated. The board approved a reduction in the limit on money market brokerage to 6 basis points, excluding regulatory levies. In the derivatives segment, the brokerage ceiling has been further reduced to 2 basis points, again excluding levies.
The regulator said the changes will reduce costs for investors while improving disclosure and compliance efficiency.
In a bid to make public issues easier to understand for retail investors, Sebi has approved the introduction of a standardized, concise and abbreviated prospectus at the draft offer document stage itself.
This gives investors early access to important information, instead of having to scroll through lengthy prospectuses. The board also approved a new mechanism to ensure that non-promoter shares comply with lock-in, even if pledged prior to an IPO, by marking such shares as non-transferable through custody systems during the lock-in period.
Also read: ‘More discussion needed’: Sebi defers key decisions on conflict of interest review for its officials
The regulator also approved a proposal that would allow issuers of listed debt securities to offer incentives such as additional interest or discounts to certain categories of investors, including senior citizens, women, defense personnel and retail investors.
Sebi said the move is aimed at increasing retail participation in the corporate bond market and encouraging more government bond issuances.
Several changes have been approved to simplify post-listing processes. Sebi will do away with the requirement for issuing confirmation letters for certain investor service requests, allowing direct crediting of securities into demat accounts and reducing timelines from around 150 days to around 30 days.
Also read: Explained: Sebi reviews mutual fund charges. Will this make your investments cheaper?
The board also approved a special window for investors holding old physical stock certificates purchased before April 2019 to file transfer deeds, subject to due diligence and exclusions for disputed cases.
To ease compliance for debt issuers, Sebu has increased the threshold for identifying high-value debt-listed entities to Rs 5,000 crore of outstanding debt, compared to Rs 1,000 crore earlier. Corporate governance standards for such entities will also be more closely aligned with those for listed companies, including changes regarding the composition of the board of directors, related party transactions and disclosure of subsidiaries.
The board further approved changes that will allow credit rating agencies to rate financial instruments regulated by other financial sector regulators, even in the absence of explicit guidance, subject to safeguards such as clear disclosure and separation of regulatory responsibilities. This is expected to increase the availability of ratings in the debt market.
Finally, the board noted the report of a high-level committee on conflict of interest and disclosure norms for Sebi’s members and officers. The board acknowledged the committee’s work but said the recommendations will be discussed in detail at a later meeting, taking into account feedback from stakeholders and employees.
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