Trading costs to reduce as SEBI slashes regulatory fee for brokers

Chennai: The Securities and Exchange Board of India (SEBI) has lowered the regulatory fee that it charges market intermediaries by 33.33 per cent, a move that might bring down overall trading costs for investors. SEBI also reduced the fees levied on agri-commodity brokers by 93.33 per cent.

Further, the regulatory fee paid by stock exchanges has also been lowered by 80 per cent. The board of the regulator, which met in Delhi on Friday, also tweaked the valuation norms for debt mutual funds, while allowing institutional investors like mutual funds and portfolio management services in the commodity derivatives segment.

“The valuation agencies appointed by Association of Mutual Funds in India (AMFI) may provide valuation of money market and debt securities rated below investment grade,” SEBI said in a release, adding that fund houses would be responsible for fair valuation and may deviate from the valuation provided by such agencies subject to certain checks and balances.

As a measure, ratings agencies typically stop valuing securities once the rating falls below investment grade, thereby leading to lack of uniformity in pricing of such securities across fund houses.

The regulator has also said entities that acquire a significant stake in a listed entity as part of debt restructuring will not be eligible for exemption from open offer obligations.

Incidentally, the IL&FS episode saw many fund houses taking a hit in different proportions after the company defaulted on its payment obligations.

The move assumes significance as India has always featured among the most-expensive countries globally in terms of trading costs in the capital market.

According to reports, the move implies that if Etihad acquires a stake in Jet Airways, it will have to make an open offer to acquire shares from the public shareholders. Such an exemption from making an open offer would, however, be available for banks and other financial institutions.