SEBI’s latest draft proposal to curb mutual fund brokerage costs could slash hidden investor charges—and fund managers and brokers alike will need to adapt fast, says Deepak Shenoy, CEO of Capitalmind AMC.

In a detailed post on X, Shenoy explained SEBI’s move to cap broker commissions paid by mutual funds.

Currently, mutual funds can pay up to 0.12% on equity and 0.05% on derivatives per trade as brokerage—amounts that do not count toward the Total Expense Ratio (TER). SEBI now wants to allow only 0.02% and 0.01% respectively as “pass-through” expenses. Anything beyond that must be absorbed within the TER limit. Advertisement

“SEBI is saying: why should mutual funds pay higher brokerage and are allowed to charge it to investors... when the higher brokerage is for research?” Shenoy wrot

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