Sebi will discuss regulations on mutual funds and stockbrokers at its December board meeting

Markets regulator Securities and Exchange Board of India (Sebi) is planning a comprehensive overhaul of both the mutual fund rules and the Stock Brokers Regulation, 1992 at its board meeting in December, according to sources aware of the development.The regulator is considering a proposal to reduce the number of rules for both mutual funds and stockbrokers by half, following the example of how the income tax law has been simplified. Sources told The Economic Times that Sebi wants the MF rules to be relevant to the current demands of the industry. The regulator wants the Total Expense Ratio (TER) charged by AMCs to be transparent and separate from taxes such as securities transaction tax (STT).

The 1992 Stock Brokers Regulations have never been revised and the regulator is now aiming to ease compliance by halving the number of rules to simplify the framework and improve ease of doing business for stockbrokers.

In recent weeks, there has been increasing talk on social media about investments by investment funds in IPOs. Sebi has already asked mutual funds to stop investing in pre-IPO deals as there is no price discovery before the stock reaches Dalal Street. However, sources say Sebi has no plans to stop mutual funds from investing in IPOs through the established anchor investor section.

In addition, the market regulator also plans to re-examine the rules regarding short selling and the SLB framework.

Currently, GST on management fees is allowed above the TER limit. However, all other regulatory costs are part of the general TER limit specified for investment funds. This means that any future changes to the statutory levy will be communicated directly to investors. Therefore, expense ratio limits are revised downwards to the extent of GST on all expenses other than management fees. Also read: Sebi not to regulate digital gold: Tuhin Kanta PandeySebi earlier said through its consultation paper that it wants to exclude statutory levies such as STT, GST, CTT and stamp duty from the expense ratio limits, along with the current allowable expenses on brokerage, exchange and supervisory fees.

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