SEBI’s Comprehensive Review of Mutual Fund and Stock Broker Rules
The Securities and Exchange Board of India (SEBI) plans to undertake a comprehensive review of its mutual fund and stock broker regulations at its board meeting on December 17, 2025, as the markets regulator seeks to make these frameworks more relevant and efficient, a senior official said on Friday.
The issues will be taken up at the board meeting scheduled for Dec. 17, 2025, the official added. SEBI has already released consultation papers on both sets of regulations. In October, the regulator issued a consultation paper proposing an overhaul of mutual fund rules, including a clearer definition of the Total Expense Ratio (TER) and revised limits on brokerage charges.
Mutual Fund Rule Overhaul
These recommendations are aimed at enhancing transparency, rationalising information, reducing redundancies, and easing compliance, the official noted. As part of the proposed framework, SEBI plans to remove the additional 5 basis points (bps) that asset management companies (AMCs) were previously allowed to levy across mutual fund schemes.
This additional expense, introduced to offset the impact of crediting exit loads back to schemes, was first set at 20 bps in 2012 and later reduced to 5 bps in 2018. The additional expense of 5 bps that mutual fund schemes were allowed to charge was transitory in nature. To further improve clarity, SEBI also suggested excluding all statutory levies such as STT, GST, CTT and stamp duty from TER limits, along with currently permissible expenses for brokerage, exchange, and regulatory fees.
For more information on mutual funds, visit our page on mutual funds. You can also learn about the different types of types of mutual funds available in the Indian market.
Stock Broker Regulation Review
In addition to mutual fund rules, the board will also take up the proposal to review the 1992 stock broker regulations. As part of this revamp, SEBI proposed introducing a definition for “algorithmic trading” to streamline compliance requirements, as the current framework lacks any such clarity.
“Regulations for stock brokers were framed 30 years ago and SEBI is looking to update them,” the official said. For more information on stock brokers, visit our page on stock brokers. You can also learn about the different types of stock brokers in India.
Conflict-of-Interest Safeguards
The Dec. 17 meeting will also consider the report of a high-level panel that examined conflict-of-interest safeguards within the organisation. Last week, the regulator indicated that the panel’s recommendations would be presented to the board.
In its report, the panel proposed wide-ranging reforms to strengthen transparency, including enhanced disclosures and a “zero-tolerance” approach to conflicts of interest among senior officials. The high-level panel submitted its report to Chairman Pandey on Nov. 10. The report also recommended setting up a secure and anonymous whistleblower system for reporting conflict of interest, ban on expensive gifts, a two-year restriction on post-retirement assignments, and creating a post of chief ethics and compliance officer (CECO).
For more information on SEBI and its regulations, visit our page on SEBI. You can also learn about the different SEBI regulations and how they impact the Indian stock market.