SEBI Overhauls Broker Rules: Caps MF Brokerage at 6 bps, Eases Small Broker Burden

The Securities and Exchange Board of India (SEBI) unveiled sweeping regulatory updates targeting brokerage economics, mutual fund expenses, and trading frameworks. The board capped brokerage paid by mutual funds to brokers at 6 basis points (bps) of assets under management, a move to curb escalating distribution costs.

Additional reforms rationalize overall mutual fund fees for investors, ease compliance burdens for smaller brokers, and introduce clear definitions for algorithmic trading to strengthen oversight. Meanwhile, BSE Ltd disclosed receiving a tax demand aggregating ₹72.5 million from authorities.

These measures balance cost discipline with operational ease, fostering a more transparent and efficient capital market ecosystem.

Key Highlights:

Brokerage Cap: Mutual funds limited to 6 bps payment to brokers.

MF Fees: Rationalized structure to benefit investors.

Small Brokers: Simplified compliance requirements.

Algo Trading: Formal definitions and oversight rules.

BSE Update: ₹72.5 million tax demand received.

Source: SEBI board meeting announcements and BSE filing, December 17, 2025.