GLS 2025: 'Engaged in sincere consultation', SEBI Chairman Tuhin Kanta Pandey on brokerage cap for MFs

SEBI Chairman Tuhin Kanta Pandey addressed the growing concerns regarding the proposed cap on brokerage fees for mutual funds, clarifying that the regulator is engaged in a sincere consultation process and no final decision has been taken.

Speaking at the CNBC-TV18 Global Leadership Summit 2025, Pandey emphasised that consultation papers are not merely for informing the public but for conducting "sincere consultations" to elicit responses from a wide array of market participants.

"I think different participants do come back to us with their views and with rationale, and then we are able to look at it. You know this, this is not a decision, but this is certainly food for thought, for everyone to comment on this, and this, to my mind, is a very good process. That means we don't really decide something in our sitting in our rooms just like that. We need to put it to wider public consultation. Have wider views, and therefore the decisions that we take are not only there is a more buy in, but also there is a better decisions that we are able to arrive," the SEBI Chairman said.

India's mutual fund industry has tripled in the last five years, and the regulator aims to double the current base of 130 million unique investors within the next five years.

Industry participants have raised concerns that a sharp reduction in the brokerage cap could diminish the quality of sell-side research, as the analyst community might shrink due to lower revenues.

However, the SEBI Chairman refused to speculate on a potential middle ground for the cap, stating, "Let us not speculate. Let the things come out." He assured that SEBI would be a "very good listener" to all rationale provided during the consultation period. He added, "We would take cognizance of different rational to do that."

When questioned on the necessity of having a cap at all, the Chairman explained that the proposal is part of a larger effort to enhance transparency for investors. He pointed out that the consultation paper also includes other significant elements, such as providing a clearer split of costs and separating taxes from the expense ratio to improve clarity. He described the brokerage cap as one specific "pain point" that has drawn attention.