look news india
From October 1, 2024, mutual fund investors will have to face a new framework announced by the Central Depository Services Limited (CDSL). The adjustment includes switching to a flat tariff of Rs 3.50 per debit transaction.
The change is a broader initiative following directions from market regulator SEBI, which has ordered all financial institutions, including depositories and exchanges, to revisit and revise their tariff plans.
The move aims to standardize transaction charges across the board, which will impact not just mutual funds but also bond issues and transactions through women's accounts.
In line with the new tariff, CDSL has also introduced a rebate of Rs 0.25 per transaction for mutual funds and bond issues. Additionally, the existing discount of Rs 0.25 per transaction for women accounts will continue.
The arrangement is part of CDSL's efforts to promote more inclusive participation in the financial markets and support diverse investor groups.
CDSL, along with National Securities Depositories Limited (NSDL), functions as one of the two major depositories in India.
Authorized by the Government of India, these depositories play a vital role in the financial ecosystem by managing a wide range of securities including equities, bonds and exchange-traded funds (ETFs).
Their work is vital to the smooth functioning of India's financial markets, ensuring security and accurate recording of securities transactions.
The impact of CDSL's new tariff structure has spread to the stock market, which has seen a surge in activity around CDSL shares.
This reaction underscores the market's sensitivity to changes in the operating structure of major financial institutions.
As the deadline set by SEBI is approaching, other financial institutions like Multi Commodity Exchange (MCX) are also making adjustments in their transaction charges to keep pace with the new regulatory environment.
Just two days before the CDSL announcement, MCX announced its revised charges for options transactions, highlighting the trend of uniformity in transaction costs across different financial platforms.
This sweeping change of tariff structure by CDSL and other financial institutions represents a significant change in the regulatory landscape impacting investors and market participants.
As these changes come into effect, investors will need to adjust their strategies to accommodate the new cost impacts of their transactions.