Mutual Fund Rules 2026: Sebi puts the rumors to rest! Short selling old, just mutual funds new rules

• SEBI’s response to rumors of short selling
• Short selling old, new rules apply only to mutual funds
• Direct benefit to index fund, ETF investors

Mutual Fund Rules 2026: On Sunday, Indian stock market regulator Sebi put an end to all misleading reports about short selling. Sebi clarified that no changes have been made to the existing short selling framework and the old system will continue. At the same time, SEBI has issued new guidelines under SEBI Rules 2026 to protect the interest of mutual fund investors. The main objective of these reforms is to eliminate hidden costs in mutual funds and make the cost structure more transparent, he said. SEBI, in an official statement, has categorically refuted media reports claiming that the new short selling norms will come into effect from December 22, 2025.

Also read: Superhit IPOs of 2025: IPOs of 2025 Hit or Flop? These IPOs have brought wealth to investors

According to SEBI, the reports circulated are completely false and investors need not worry about any changes. The regulator has issued this clarification to maintain market integrity and avoid any confusion among traders and investors. The SEBI Board has approved the SEBI (Mutual Funds) Regulations, 2026 replacing the old rules of 1996. This change will have the biggest impact on the Total Expenditure Ratio (TER).

Now, the fees charged to investors will be divided into three distinct categories. There will be base expense ratio, broker fees and statutory charges. This will make it easier for investors to understand how much of their money is going to fund management and how much is going to taxes or other charges. This will ensure transparency in the transaction. Under the new rules, SEBI has decoupled some key charges like GST, stamp duty and STT from the base expense ratio. These charges will now be levied only on actual cost basis.

Also read: 8th Pay Commission: Pay hike possible from 1st January 2026? Millions of government employees got curious

Additionally, SEBI has raised the maximum expense limit for index funds and ETFs from 1 percent to 0.9 percent. For closed-end equity schemes, this limit has been reduced from 1.25 per cent to 1 per cent, thereby improving returns for investors. SEBI has also revised the broker fee limits to prevent fund houses from charging arbitrary fees. The limit is now fixed at 6 basis points for equity cash market transactions and 2 basis points for derivatives. Strict rules have also been imposed on distribution commissions and performance-based expenses. SEBI believes that these steps will make the mutual fund industry more accountable and strengthen investor confidence in the market.