This would help allay concerns from institutional brokers who feared a hit to their earnings, and from asset managers who argued that a lower limit could impact their ability to pick the right stocks, the sources said.
The sources did not want to be identified as discussions between SEBI and industry are private.
An email inquiry sent to SEBI was not immediately answered.
SEBI had late last month proposed changes in the fee structures of mutual funds to make them more transparent and reduce costs for investors.
As part of this, it had proposed reducing the cap on brokerage fees paid by mutual funds for spot market transactions from 12 basis points to 2 basis points.
If implemented, the proposal would have led to a major difference in rules between India and developed markets like the US, where there is no cap on brokerage fees paid by funds.
According to the two sources, the industry has argued that the steep cut will reduce the fees they can pay to sell-side research analysts, giving foreign investors and hedge funds an advantage as they will be able to pay a relatively higher fee.
“The industry has argued that equity schemes generally require more research support. Any reduction in research fees will also impact returns,” one of the sources said.
There is some merit in the arguments, but SEBI’s analysis has shown that foreign investors are more conservative in paying for research than mutual funds, the source added.
SEBI wants to reduce costs for retail investors and attract them to invest, the source said, adding, “but there is certainly room for negotiation to address industry concerns and achieve SEBI’s target”.
The new limit will be decided after the sector consultation is completed in mid-November, the sources said.
Published on November 6, 2025
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