The Securities and Exchange Board of India (SEBI), at its board meeting last week, announced a series of reforms aimed at enhancing transparency, easing compliance, and reducing costs across capital markets. These changes span mutual funds, IPOs, listed debt, stockbrokers, and share transfer processes, marking one of the most comprehensive regulatory updates in recent years.
Mutual Fund Regulations: Lower Costs & Clearer Disclosure
Mutual-fund investing is set to become cheaper and more transparent as the new Mutual Fund Regulations replace the Mutual Fund Regulations, 1996. A key reform is the introduction of the Base Expense Ratio (BER), which replaces the earlier Total Expense Ratio (TER).
The BER will include only core fees charged by the fund, while pass-through costs such as securities transaction tax (STT), goods and services tax (GST), stamp duty, and exchange fees will be disclosed separately. This ensures that investors can clearly see where their money is going.
Additionally, SEBI has lowered the permissible BER limits across categories, which should result in slightly lower costs for investors over time.
Easier Compliance for Listed Debt Issuers
Compliance for raising listed debt has been eased with a revision in thresholds for High-Value Debt Listed Entities (HVDLE). Stricter norms will now apply only when outstanding listed debt exceeds ₹5,000 crore, up from the earlier ₹1,000 crore threshold.
This change will reduce compliance burden and encourage wider participation in the corporate bond market.
New Stock Broker Regulations for the Digital Era
SEBI has introduced the Sebi (Stock Brokers) Regulations, 2025, replacing the nearly three-decade-old 1992 regulations. The new framework is streamlined into 11 simplified chapters, designed to meet the needs of digital trading platforms.
Key highlights include:
Formal definition of algorithmic trading
Clearer norms for proprietary trading
Regulatory framework for execution-only platforms, especially those facilitating direct mutual fund transactions
Stock exchanges acting as first-line regulators for stockbrokers
Brokerage caps have also been revised downward:
Spot market brokerage reduced from 8.59 bps to 6 bps
Derivatives brokerage reduced from 3.89 bps to 2 bps
These changes are expected to lower transaction costs for investors.
Simpler IPO Rules & Stronger Bond Market
Amendments to the Issue of Capital and Disclosure Requirements (ICDR) norms make IPO participation smoother. Shares held by non-promoter individuals will now be locked in for six months prior to the IPO, enhancing fairness and stability.
The higher HVDLE threshold will also make bond issuances easier, encouraging depth and liquidity in the debt market.
Expanded Role for Credit Rating Agencies
Credit-rating agencies will now be permitted to rate instruments regulated by other authorities, such as the Reserve Bank of India (RBI). This expands the scope of ratings for unlisted debt instruments.
However, clear distinctions will be mandatory in rating reports and marketing material between:
SEBI-regulated products, and
Products regulated by other authorities
This ensures better clarity and avoids investor confusion.