Blitz Bureau
NEW DELHI:India’s capital markets are undergoing a quiet but consequential transformation as the Securities and Exchange Board of India (Sebi) rolls out a series of reforms designed to make investing safer, fairer and more transparent.
Taken together, these measures reflect a regulator responding to a maturing market — one marked by unprecedented retail participation, rising institutional interest and increasing product complexity.
A central plank of Sebi’s recent push is the overhaul of costs in the mutual fund industry. The introduction of the Base Expense Ratio (BER) marks a decisive shift away from opaque fee structures. By clearly separating fund management fees from pass-through expenses such as brokerage, transaction taxes and exchange charges, Sebi has made it easier for investors to understand exactly what they are paying for.
The broader intent is clear: encourage a gradual transition from commission-driven models to ones anchored in service quality and client trust.
At the same time, the regulator has lowered the ceiling on expense ratios across several categories, particularly equity-oriented schemes. For long-term investors, this translates into meaningful savings over time and more informed fund comparisons.
Brokerage commissions have also come under sharper scrutiny. Sebi has reduced commission caps in both the cash and derivatives segments, addressing long-standing concerns about excessive costs and conflicts of interest.
Notably, these changes were fine-tuned after consultations with industry participants, signalling a measured approach that balances investor protection with the operational realities faced by brokers and distributors. The broader intent is clear: encourage a gradual transition from commission-driven models to ones anchored in service quality and client trust.
Another area seeing significant reform is mergers and acquisitions. Proposed changes to takeover regulations aim to protect minority shareholders by curbing preferential deals for large investors, mandating independent valuations in select cases and shortening open-offer timelines.
Faster, more transparent deal processes are expected to reduce uncertainty and improve confidence among both retail and institutional investors, while also making India’s M&A framework more predictable.
Investor grievance redressal has received renewed attention as well. With the upgraded Scores platform, Sebi has tightened timelines and accountability for resolving complaints. As millions of new investors enter the market, quicker and more reliable redressal mechanisms have become essential to maintaining trust in the system.
Sebi’s stance has been particularly firm in high-risk areas such as derivatives trading. Regulator-led studies highlighting persistent retail losses have prompted tighter norms around algorithmic trading and enhanced risk disclosures. By publicly acknowledging these risks and backing the findings with regulatory action, Sebi has underlined its commitment to evidence-based supervision rather than reactive rule-making.
The impact of this reform cycle is visible in market participation. Investor accounts have surged to record levels, while mutual fund assets under management have expanded sharply, supported by rising systematic investment plan contributions. This suggests that participation is deepening, not merely spiking on speculative interest.
Overall, Sebi’s recent actions point to a regulator intent on strengthening the foundations of India’s financial markets. By lowering costs, improving transparency, speeding up processes and reinforcing investor safeguards, it is seeking to ensure that growth is durable and confidence-driven.
For investors and institutions alike, the direction is unmistakable: India’s markets are being shaped to be more resilient, credible and aligned with global best practices.