SEBI Extends Window For Feedback On Mutual Fund Expense Ratio Consultation Paper
The mutual fund industry will now have till June 6 to submit feedback and comments on proposed rules governing expense ratio.
The Securities and Exchange Board of India has extended the window for the mutual fund industry to submit feedback on the consultation paper it floated earlier this month.
The paper proposes to overhaul the regulations governing expenses chargeable on actively managed mutual fund schemes. Industry participants now have until June 6 to provide input on the consultation paper. Earlier, industry participants had been given till June 1 to submit feedback and comments.
"This window has now been extended to June 6," A Balasubramanian, chairperson of the Association of Mutual Funds in India said, on the sidelines of an event organised by the industry body.
On May 20, the markets regulator had issued a consultation paper proposing to change the manner in which total expense ratio is levied on actively managed mutual fund schemes. The total expense ratio, or TER, is a percentage of the daily net asset value of a mutual fund scheme and includes the charges an investor pays to a mutual fund. Currently, the limits on TER are based on assets under management at the scheme level.
The consultation paper proposes to change the caps for this ratio to asset management company-wise limits based on assets under management. In several cases, this will result in a reduction in the expenses charged by mutual funds. According to SEBI's research, eight mutual fund houses currently control nearly three fourths of the assets under management in the industry.
At the AMFI event, SEBI Chairperson Madhabi Puri Buch said the regulator followed a different approach from the usual to changing the regulations governing the total expense ratio. As a number of asset management companies are listed on the stock exchanges, the information on the regulatory changes were construed as price sensitive.
As a result, the regulator decided to first float a public consultation paper and then engage in dialogue with the industry to formulate the final policy, she said. SEBI will follow a "co-creation" approach to formulating regulations governing TER, she said.
