Shares of asset management companies moved higher after the market regulator, the Securities and Exchange Board of India (SEBI), approved a comprehensive revamp of mutual fund regulations in its recent board meeting. The changes include a revision in the expense ratio framework and a reduction in brokerage charge limits, aimed at enhancing transparency and protecting investor interests.

HDFC Asset Management Company is currently trading at rate RS 2,724.20, up by 182.95 points or 7.20% from its previous closing of rate RS 2,541.25 on the BSE.

Canara Robeco Asset Management is trading at rate RS 302.60, gaining 15.85 points or 5.53% from its previous close of rate RS 286.75 on the BSE.

Nippon Life India Asset Management is currently quoted at rate RS 909.65, up by 44.80 points or 5.18% from its earlier closing of rate RS 864.85 on the BSE.

As part of the regulatory overhaul, SEBI decided to remove the additional 5 basis points (bps) that asset management companies were earlier permitted to charge across mutual fund schemes. This extra expense, initially introduced at 20 bps in 2012 to offset the impact of crediting exit loads back to schemes, was later reduced to 5 bps in 2018 and was always intended to be temporary. With the objective of rationalising costs for unitholders, SEBI has now decided to eliminate this additional charge.

Further, to safeguard investor interests and ensure expenses are charged fairly and only once, SEBI has revised brokerage charges. The brokerage cap for cash market transactions has been reduced from 12 bps to 6 bps, while for derivative transactions it has been lowered from 5 bps to 2 bps, bringing greater clarity and transparency to the cost structure.