New Delhi. Securities and Exchange Board of India (SEBI) has made important changes in the rules to Mutual Funds. Its objective is to increase transparency, protect the interests of investors and ensure better governance in fund houses. These new rules will come into effect from 1 April 2026.

What are the new rules?
Under the new rules, important changes have been made in the expense structure of mutual fund schemes. Mutual fund schemes will now be able to charge a base expense ratio linked to their performance. SEBI has clarified that schemes which opt for performance based base expense ratio will have to adhere to the expense structure and disclosure norms prescribed by the Board from time to time. Apart from this, it will be mandatory to show the total expenditure in different parts. Apart from this, SEBI has also reduced the brokerage limit. The maximum limit of brokerage in the cash market has been reduced to 6 basis points. Whereas in the derivatives segment, the net brokerage cap has been reduced from 3.89 basis points to 2 basis points.

Apart from this, earlier expenses like brokerage, securities transaction tax (STT), stamp duty and exchange fees were included in the total expense ratio (TER). Now they will have to be shown separately. The new base expense ratio will only reflect the fees charged by the asset management company for managing investors’ money. Apart from this, SEBI has also enhanced the responsibilities of the Trustee and Key Managerial Personnel (KMPs). This will further tighten monitoring and accountability on asset management companies, which will strengthen governance standards.

Proposals for changes in stock market also
Recently SEBI proposed major changes in the structure to trading in stock markets. It aims to simplify the rules, remove duplication and reduce the compliance burden for market participants. These proposals are part of SEBI’s broader initiative to enhance ease of doing business in stock exchanges and commodity futures-options markets.