By Prarthana Mitra
In addition to slashing the total expense ratio and banning upfront commissions, the Securities and Exchange Board of India (SEBI) on Tuesday cut mutual fund fees for investors, modified the consent mechanism for securities market offenders and introduced rules for mandatory debt market borrowings for large companies.
Slashing fees for mutual funds
Investors in equity mutual funds stand to gain from the reduction in the total expense ratio (TER), the annual fee for investing in open-ended equity schemes. According to the latest announcement, larger funds will have to slash fees by a bigger amount. The expense ratio for schemes with assets under management up to Rs 500 crore will be 2.25% every year, while those above Rs 50,000 crore will be able to charge 1.05%. This can generate savings up to Rs 1,500 crore for investors, said whole-time member Madhabi Puri Buch at a press conference after the board meeting.
For overseas investors
Bar on commissions
A decision was also reached about disallowing the mutual fund industry from doling out upfront commissions to distributors.
Consent mechanism
The capital market regulator announced various other measures to make investing in mutual funds easier and protect the interests of small investors. The regulator also announced it would cut down the listing period after an initial public offering (IPO) to T+3 from T+6 now. This means a company will now get to list three days after the IPO. SEBI also announced new restrictions on fundraising through various share sales or making an open offer for Fugitive Economic Offenders.
Prarthana Mitra is a staff writer at Qrius