Increasing efficiency

Lower compliance will help expand the reach of passive funds

The Securities and Exchange Board of India’s (Sebi’s) proposal to lighten the compliance load for asset management companies (AMCs) offering only passive mutual funds and exchange-traded funds (ETFs) is a practical decision and potentially a game changer in terms of expanding the field for this class of instruments. Sebi has said the so-called new “MF Lite” regulations will be introduced this financial year and these will reduce the compliance burden on the purveyors of passive instruments to around a tenth of current levels. There is an important regulatory distinction compared to AMCs offering active diversified schemes. Active funds need to