Securities & Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey has agreed to relook at its the proposal to slash brokerage costs for asset management companies (AMCs), a source said on Monday.
In a closed-door meeting on the sidelines of the CII Financing Summit, institutional brokers made several representations in this regard to DEA Secretary Anuradha Thakur, Chief Economic Advisor V Anantha Nageswaran, and Sebi chairman Tuhin Kanta Pandey. The sebi chief has agreed to have a relook, the source said.
According to the CBO of an AMC, it will be difficult for them to take the fee hit. If the final circular remains the same, it would be passed on to the broker. Another participant said: “Brokerages also add value in terms of research, and running their business at 2 bps would be difficult. There are small brokerages who don’t offer research. The question is: Do you bundle the two, or unbundle the two.”
In October, Sebi proposed changes to mutual fund fee structures to ensure transparency and reduce costs for investors. It had proposed lowering the cap on brokerage fees paid by mutual funds for cash market transactions to 2 basis points from 12 basis points.
Kaku Nakhate, India CEO of Bank of America, said in a panel discussion: “We have attracted long-only funds, and have started attracting debt funds now with our inclusion in the indices. But what we are not doing enough is multi-asset funds or private credit funds.”
Nakhate said markets have become volatile and at least 25-30% of big HNI monies are going into private credit funds. “So, we really need to work towards attracting that and high net worth families across the world, including India, to finance the growth.”