The Securities and Exchange Board of India (SEBI) has approved a wide-ranging set of regulatory changes aimed at enhancing transparency, cost-efficiency and investor protection in the capital markets, focusing particularly on mutual funds and IPO processes. However, the regulator has postponed a key decision on strengthening conflict-of-interest norms for its own officials, opting for further deliberations before any final implementation.
Under the new framework, SEBI overhauled the mutual fund fee structure to make charges more transparent for investors. This includes redefining the traditional total expense ratio (TER) as the base expense ratio (BER), which will exclude statutory levies like GST, stamp duty and securities transaction tax, allowing these to be charged separately on actuals. The cap on brokerage fees paid by mutual funds has also been rationalised, potentially leading to lower costs for investors.
The regulator also simplified IPO disclosure requirements by introducing a standardised, concise abridged prospectus at the draft offer document stage, aimed at making information more accessible before a public issue. In addition, SEBI eased pre-IPO lock-in rules and approved revisions to stock broker regulations, streamlining compliance and modernising the rulebook.
On the matter of conflict-of-interest norms, SEBI’s board deferred the decision to adopt a new internal framework for managing conflicts of interest among its top leadership and officials, including disclosures and ethical standards. This move follows feedback from stakeholders and acknowledges the need for deeper discussion before implementing binding changes.
Overall, SEBI’s reforms signal a major regulatory shift — the most comprehensive in nearly three decades — with an emphasis on cost transparency, investor protection and clearer disclosures, while delaying action on internal governance rules to allow for more detailed review.
