Motilal Oswal shares fall nearly 8%, the most in six months, due to this SEBI proposal

Shares of Motilal Oswal Financial Services Ltd. are down nearly 8% on Wednesday, October 29, in response to the proposals made by market regulator Securities & Exchange Board of India (SEBI).

Market regulator SEBI proposed on lowering the cap on brokerage fees paid by mutual funds as part of draft regulations released on Tuesday evening.

The draft regulations proposes to reduce brokerage fees on cash market transactions to 2 basis points from 12 basis points earlier, and for transactions in the derivatives market,

the fees is proposed to be cut to one basis point from five basis points earlier.

In an interaction with CNBC-TV18, Pratik Gupta of Kotak Institutional Equities highlighted that he expects small and mid-sized brokers to be impacted if the SEBI norms are implemented, and that the regulator should let the free market forces prevail in such circumstances.

Ashish Somaiyaa of Whiteoak Capital AMC also added that it remains to be seen how will the industry absorb the reduction in the Total Expense Ratio, further stating that he expects a total hit to be between 10 to 12 basis points, if the SEBI draft regulations are implemented.

Shares of Motilal Oswal Financial Services are trading 7.5% lower on Wednesday, at ₹1,009.2. The stock, despite this fall, is up over 10% in the last one month, and as a result, it also turned positive on a year-to-date basis.