SEBI Revamps Market Regulations to Boost Investor Participation

The Securities and Exchange Board of India has approved comprehensive reforms aimed at simplifying market regulations, enhancing transparency, and reducing costs. These changes are expected to attract more investors into mutual funds, equity, and debt markets by updating frameworks and clarifying regulations, thereby boosting confidence in India’s capital markets.

The Securities and Exchange Board of India (SEBI) announced sweeping regulatory reforms this Wednesday, setting the stage for simplified market regulations, reduced transaction costs, and heightened cost transparency. These strategic measures are anticipated to escalate investor engagement within mutual funds, equity, and debt markets.

In Mumbai, SEBI's board decided to overhaul the nearly three-decade-old SEBI (Stock Brokers) Regulations, 1992, replacing it with a more explicit and compliant-friendly framework. Among the crucial reforms is a revamp of the Mutual Fund Expense Ratio framework, which notably slashes base expense ratios across all categories. These expenses will exclude statutory levies like the Securities Transaction Tax and be charged based on actuals, enhancing investors' transparency.

The regulatory authority has set new brokerage limits for mutual funds, cutting cash market brokerage caps from 12 basis points to about 8.59 basis points post-levies. Similarly, in the derivatives segment, brokerage fees fall to approximately 3.89 basis points net of levies. SEBI also made strides in the corporate bond market, allowing issuers of non-convertible securities to incent select investor groups through special offers, encouraging a broader market participation.

(With inputs from agencies.)