AMC Stocks Slide as SEBI Proposes Overhaul of Mutual Fund Fee Structure

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Last Updated: 29th October 2025 - 03:41 pm

1 min read

Summary:

Shares of major asset management and capital market firms, including Motilal Oswal Financial Services, HDFC AMC, and Nippon Life India AMC, fell sharply after SEBI released a consultation paper proposing changes to the mutual fund fee structure. The regulator suggested cutting brokerage charges, from 12 bps to 2 bps for cash transactions and from 5 bps to 1 bps for derivatives, to enhance transparency and protect investors. SEBI also proposed removing the 5 bps additional expense on total AUM, while offsetting it with a 5 bps increase in base TER limits for open-ended active schemes.

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Shares of leading asset management and capital market firms plunged sharply on Wednesday after the Securities and Exchange Board of India (SEBI) released a consultation paper proposing sweeping changes to the mutual fund fee framework.

Motilal Oswal Financial Services and IIFL Capital were among the hardest hit, tumbling over 8% each in intraday trade. Shares of HDFC Asset Management Company (HDFC AMC) and Nippon Life India Asset Management fell more than 4%, while Nuvama Wealth Management, UTI AMC, and Aditya Birla Sun Life AMC also traded lower by 3–6%. The Nifty Financial Services and Capital Markets indices also came under pressure, dragging the broader markets in early trade.

The sell-off followed SEBI’s proposal to simplify and rationalize the total expense ratio (TER) structure of mutual funds and reduce brokerage and transaction costs associated with these schemes. The highlight of the paper is the reduction of brokerage and transaction cost tied to a mutual fund. "To protect interest of investor and to ensure that expenses are charged fairly only once to the investors, the brokerage charge has been revised," the SEBI circular stated. The market regulator revised the brokerage from 12 bps to 2 bps for cash market transactions and 5 bps to 1 bps for derivative transactions "to bring clarity and transparency."

In a major proposal, SEBI has suggested doing away with the temporary 5 basis points (bps) additional expense that asset management companies (AMCs) have been permitted to levy on their total assets under management (AUM) since 2018. To balance this change, the regulator has recommended a corresponding 5 bps hike in the base Total Expense Ratio (TER) limits for open-ended active mutual fund schemes.

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