[ad_1]
India’s stock market regulator’s board is set to hammer out the most sweeping revision of rules in decades between mutual funds, stock brokers and its own executives later this month, two people aware of the meeting’s agenda said. The board will discuss bringing new rules, updating old rules and removing overlapping rules.
In October, the Securities and Exchange Board of India (SEBI) had proposed limiting the brokerage and transaction costs that mutual funds charge over and above the annual fees collected under their total expense ratio (TER). Sebi also proposes to eliminate the additional five basis points charged on exit load and introduce more comprehensive disclosure of TER, which is used to cover management and operating costs.
“Mutual fund rules and stock broker norms will definitely be part of Sebi’s agenda,” said one of the two people quoted above, on condition of anonymity. The regulatory board meeting will be held on December 17.
SEBI spokesperson did not comment on this of mint Question.
The proposed overhaul of mutual fund rules aims to improve transparency in costs and charges charged by mutual funds; However, the regulator’s October suggestions were criticized by asset management companies (AMCs), who claim that lower brokerage will reduce income, impact research work and lead to loss of block deals from brokers. Meanwhile, mutual fund distributors are worried that AMCs will take some pain, which will reduce their own earnings.
“If the recommendations on brokerage costs are accepted as is, it will have an impact on AMCs. But we are expecting Sebi to step in,” an AMC official said on condition of anonymity.
Sebi is also expected to make changes to rules governing stockbrokers, which will formalize definitions for algorithmic and proprietary trading, streamlining pre-1992 rules, the people cited above said. Many of these rules do not reflect the boom in electronic, high-frequency and algorithmic trading that now dominates equity markets. Updating that framework will bring much-needed clarity, reduce overlapping or outdated provisions, and reduce compliance complexity for intermediaries.
Last month, SEBI Chairman Tuhin Kanta Pandey had said that the regulator has started work on improving settlement norms, and a consultation paper is forthcoming. However, the SEBI board is unlikely to discuss the matter on December 17.
“The amendments are still in the early stages, and it is too early to discuss them at the board meeting,” the person quoted above said.
The Sebi board will also discuss the recommendations of a top committee on changes to its conflict of interest and disclosure norms, marking the most comprehensive set of internal reforms at the regulator.
Sebi had formed the committee in March following Hindenburg Research’s allegations of conflict of interest against Madhabi Puri Buch, who was the Sebi chairperson till February. In August 2024, a US short-seller had claimed that Butch and her husband had undisclosed interests in Bermuda- and Mauritius-based entities allegedly linked to the Adani Group, while SEBI was investigating fraud allegations against the group. Both Adani Group and Buchs rejected the claims.
The SEBI committee proposed that candidates for posts such as Chairman, Whole-Time Member (WTM) and other lateral appointees would be required to make full pre-appointment disclosure of any actual, potential or perceived conflict of interest, while senior SEBI officials would also be required to publicly declare their assets and liabilities, among other measures.
Lawyers are hopeful that SEBI will relax some of the proposed rules for its employees. Public disclosure of assets and liabilities has raised concerns among SEBI employees that their confidentiality may be breached.
Abhiraj Arora, partner, Saraf & Partners, said, “Sebi may consider confidentiality for its employees’ disclosures, which is appropriate. The employees’ representation on this has already gone to HR. It is possible that they may subdue the panel’s recommendations as it may set a precedent for other regulators/agencies.” “Stock broker rules will be updated based on technology and current market practices,” he said.
[ad_2]
