SEBI's new rules could make mutual fund investing a lot cheaper
SEBI is looking to seriously cut the brokerage fees that mutual funds pay, aiming to make investing cheaper and more transparent for everyone.
If this goes through, brokerage charges could drop from 12 to just 2 basis points for regular trades, and from 5 to 1 basis point for derivatives.
That's a big shift in India's massive ₹75.6 lakh crore mutual fund scene.
What's the impact on TER?
If these new limits kick in, any extra brokerage will have to be counted in the Total Expense Ratio (TER)—which covers all scheme expenses as defined by SEBI, including management fees, operational and distribution costs, and other allowable expenses.
For example, a fund with ₹1,000 crore assets now pays about ₹1.2 crore on brokerage; under the new rules, that drops sharply to just ₹0.2 crore outside of TER.
This would mean less revenue for asset management companies but lower costs—and potentially better returns—for you as an investor.
What does this mean for you?
This move could hit big brokers' earnings but is designed to help regular investors keep more of their money working for them.
SEBI also hopes it'll push fund houses toward greater efficiency and may make low-cost index funds more attractive to investors seeking cost-effective options.
Public feedback is open until November 17, so if you've got thoughts on where your money goes, now's your chance to speak up!