SEBI board approves renewal of broker and MF rules; postpones the conflict of interest code

Tuhin Kanta Pandey, Chairman, Securities and Exchange Board of India | Photo credit: FRANCIS MASCARENHAS

“There are privacy concerns among certain employees about public disclosure of assets and liabilities, including movable and immovable assets. While they are willing to make such disclosures internally to the appropriate authority, there is reluctance to put this information in the public domain,” SEBI chairman Tuhin Kanta Pandey said at a press conference after the board meeting.

Among the other issues is whether spouses who use their own resources should face restrictions. Even global regulators such as the US SEC do not impose blanket bans, but instead rely on pre-approval and disclosure-based mechanisms, he said. The board, he said, would hold further discussions taking into account employee concerns, public feedback, media reports and operational modalities.

Pages reduced in size

The SEBI board approved the replacement of the nearly three-decade-old regulations for stockbrokers with a new, streamlined framework. The revised rules have been reduced from 59 pages to 29 pages previously, with a sharper focus on core compliance principles such as the protection of client money and securities, risk management, internal controls and cybersecurity, while removing repetition and outdated provisions.

The board also approved a comprehensive rewrite of the mutual fund regulations, reducing its length from 162 to 88 pages. A key change is the restructuring of the Total Expense Ratio (TER) framework, under which statutory levies such as securities transaction tax, GST, stamp duty and commodity transaction tax will be excluded from the basic expense ratio limits and charged separately based on actual costs. SEBI has also removed the additional expense allowance of 5 basis points related to exit taxes.

Capital for real estate

Following industry feedback and opposition, brokerage limits for equity cash market transactions have been set at 6 basis points, net of regulatory levies, compared to higher effective costs previously, while brokerage rates for derivatives transactions have been set at 2 basis points. Pandey said these are ceilings and not floors, and fund houses remain free to charge lower fees in a competitive market.

Furthermore, the regulator will make IPO disclosures more accessible to retail investors. A concise, standardized short-form prospectus will now be made available at the draft stage of the Red Herring Prospectus (DRHP), allowing investors to assess key details earlier in the process. The SEBI board has also approved system-driven lock-in mechanisms for pledged pre-issue shares to ensure compliance with IPO norms.

On concerns around offer-for-sale (OFS) and anchor allotments, Pandey reiterated that SEBI would continue to follow a disclosure-based regulatory regime. “We do not want to interfere with prices as long as they are fair and transparent,” he said, adding that guardrails would only be investigated if transparency was compromised.

Published on December 17, 2025