SEBI cheers investors by cutting fees for brokers, bourses

Our Bureau New Delhi | Updated on March 01, 2019

Unveils new norms for valuation of money market and debt securities by MFs

An investor will now have to pay less with the Securities and Exchange Board of India (SEBI) deciding to lower the fees collected from stock brokers, stock exchanges and companies that plan to get listed.

The SEBI board, which met here on Friday, also approved changes in norms for valuation of money market and debt securities by mutual funds.

A statement from SEBI said that it has been following the practice of calibrating the fees either upwards or downwards from time to time to keep a balance between the transaction cost in the securities market and the financial resources required to ensure regulatory efficiency. “Keeping this objective in mind and taking into consideration the projected income and expenditure of SEBI for the next three financial years, the board has decided to revise the fee structure with effect from April 1,” it said.

The fees payable by brokers has been reduced by one-third — from ₹15 per crore of transactions to ₹10 per crore of transactions. The fees payable by brokers for agri-commodity derivative transactions has been reduced by 93.33 per cent — ₹1 per crore from ₹15 per crore of transactions. It has been decided to reduce the fees payable by the issuers for one refiling of offer documents by 50 per cent from the current levels, if the refiling is done within one year of the validity of observation letter.

The regulatory fee paid by the stock exchanges has been reduced by 80 per cent to ₹1.20 per crore from ₹6 for turnover in excess of ₹10 lakh crore. However, the fixed cost of ₹1 crore for transaction up to ₹10 lakh crore will remain the same.

Leeway for AMCs

The board approved a proposal to make the existing valuation practices more reflective of the realisable value of the money market and debt securities with residual maturity up to 60 days.

Accordingly, the residual maturity limit for amortisation-based valuation by mutual funds will be reduced from the existing 60 days to 30 days. Also, the threshold maintained between the reference price and the valuation price will be 0.025 with movement in both the directions.

To bring uniformity and consistency across the MF industry on valuation of money market and debt securities rated below investment-grade, it was decided that the valuation agencies appointed by the Association of Mutual Funds in India (AMFI) might provide valuation of instruments below investment- grade.

As the Asset Management Companies are responsible for fair valuation, they may deviate from the valuation provided by the valuation agencies subject to recording of detailed rationale for such deviations, appropriate reporting to the Board of the AMC and Trustees and appropriate disclosures to investors, SEBI’s board noted.

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Published on March 01, 2019

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