In a circular, the regulator said that fund houses can levy brokerage and transaction costs, with a ceiling of 0.12 per cent for cash market transactions and 0.05 per cent for derivatives dealings.
\"The brokerage and transaction cost incurred for the purpose of execution of trade may be capitalised to the extent of 12 basis points and 5 bps for cash market transactions and derivatives transactions, respectively,\" Sebi said.
According to the regulator, any payment towards brokerage and transaction costs over and above prescribed limit would be borne by the Asset Management Company or by the trustee or sponsors.
Besides, mutual funds can charge additional expenses of up to 0.30 per cent of daily net assets, if the new inflows from places other than to top 15 cities are 30 per cent of the gross new inflows in the scheme, or are 15 per cent of the average assets under management (year to date) of the scheme, whichever is higher.
Sebi said expenses charged under these clauses would have to be utilised for distribution expenses incurred for bringing inflows from such cities.
Among other measures, the fund houses would have to calculate the Net Asset Value (NAV) of the scheme on daily basis and publish the same in at least two daily newspapers with nation-wide circulation.
Also, any exit load charged by the fund houses would have to be credited to back to the scheme.
This measure, along with capping of the total additional expenses at 0.2 per cent in normal case, are expected to encourage long term holding, reduce churn and align the interests of the fund houses and distributors with that of the investors.
These particular steps would not result in any additional cost to the investors, but the provision for additional expenses of up to 0.3 per cent for inflows from smaller cities could make the investments costlier at the investors\' end.
In case of a fund of funds scheme, the total expenses of levied on the scheme would be capped at 2.50 per cent of the daily net assets of the scheme.
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