AMC Stocks: Market regulator SEBI (Securities and Exchange Board of India) has approved changes in the fee structure of mutual funds. SEBI has done this to encourage transparent disclosure of cost breakup. This boosted AMC shares and they jumped as much as 8.5%. The Nifty Capital Markets index jumped more than 2%. Nippon Life AMC shares jumped 6% and HDFC AMC shares jumped 4.5%. Whereas shares of UTI AMC rose 4% and ABSL AMC rose 1.7%. Meanwhile, shares of recently listed Canara Robeco AMC jumped 8.5% on SEBI’s changes.
Which changes of SEBI filled AMC Stocks with enthusiasm?
The SEBI board has changed the limit of brokerages given to brokers and distributors. Statutory levy will also not be included in this. SEBI has taken this decision so that there can be a ban on charging research related costs from investors twice. The brokerage limit for cash market transactions has been reduced to 6 bps from the existing 12 basis points. Earlier it also included statutory levies. Whereas the brokerage cap for derivative transactions has been reduced to 2 bps from the earlier 5 bps. This decision was taken by SEBI in the board meeting held on December 17. SEBI has also removed the additional charge of 5 bps on allowance which is charged along with the exit load on schemes.
Why was AMC stocks affected by SEBI’s decision?
Market regulator SEBI’s decision is expected to reduce the average cost of transacting stocks for fund managers by 10-15 bps from the current level to 12 bps. There were discussions about the Total Expense Ratio (TER) of mutual funds for a long time, SEBI’s decisive decision regarding this has given a lot of relief to the fund houses and brokerages.
An important change is that instead of Total Expense Ratio (TER), Base Expense Ratio (BER) has now been implemented. SEBI has excluded GST, stamp duty, securities transaction tax (STT), commodity transaction tax (CTT) and other statutory charges from BER. As a result, BER will now include fund-level costs like management fees, distribution brokerages and RTA charges and taxes will be disclosed separately.
Under the new framework, the maximum expense ratio for open-ended equity schemes with assets less than ₹500 crore has been reduced from 2.25% to 2.10%, while for debt schemes of the same category, it has been reduced from 2% to 1.85%. Overall, the expense ratio for active equity funds will now be 0.95%-2.1%, while for fixed income funds it will be between 0.7%-1.85% as per AAUM. This limit will be 0.95% for equity schemes managing assets of more than ₹50 thousand crore and 0.7% for debt schemes.
What does the brokerage firm say?
Global brokerage firm Citi says the impact of SEBI’s decision on large asset management companies will be almost neutral while it will be slightly positive for mid-scale firms with high distributor payouts. Citi says the impact on wealth managers like Nuvama and 360 One will be very limited and the impact on their consolidated revenues will be less than 1%. Today Nuvama shares rose 4% and 360 One shares rose 1%.
Citi says that if the cut in equity TER is not passed-through, there will be an 8-9% impact on the core earnings of other listed AMCs except Canara Robeco AMC. However, Citi also says that the impact of 5 bps has already been factored into the share price as listed AMC stocks had fallen by 4-5% since the release of the October 2025 discussion paper. According to Citi, this indicates that market consensus assumes a roughly 50% pass-through of earnings estimates.
Another brokerage firm PL Capital says the GST-linked total expense ratio (TER) cut on management fees by 10 bps compared to the proposed 15 bps could be profitability neutral for the top 6 AMCs. Whereas for small AMCs it may be slightly positive. In such a situation, PL Capital says that there is no major or significant change in the core earnings of the AMC stocks it is covering.
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