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Informist, Thursday, Jul. 23, 2026

 

--SEBI issues consultation paper to review  norms on portfolio mgmt svcs 

--SEBI seeks comments on comprehensive review of PMS norms by Aug 13 

 

NEW DELHI – The Securities and Exchange Board of India Thursday released a consultation paper on a comprehensive review of the regulations on portfolio management services. The regulator sought comments and suggestions on the consultation paper by Aug. 13.

 

One of the broad proposals was to enable more investment avenues to develop the PMS industry, which had assets under management of INR 42.61 trillion as of May 31. Other points in the consultation paper related to easing compliance measures and simplifying language on regulation, along with dealing room relaxations for smaller portfolio managers. SEBI also sought feedback on whether PMS can be offered to global funds, among other proposals.

 

The current regulations for portfolio managers have been in effect since 2020. Since the last review, the number of portfolio managers has more than doubled to 515 from 226 and the client base has grown to 219,000 at the end of May from 150,000, the regulator said. 

 

SEBI proposed that portfolio managers be allowed to invest in "to be listed" securities to allow for wider market opportunities. Discretionary PMS may also invest up to 10% of their client's assets under management in investment-grade unlisted debt securities, the consultation paper said. Portfolio managers may also invest client funds in listed equity shares, listed debt securities, and registered funds overseas, the regulator said.

 

This would enable investors to get access to foreign securities through a regulated investment professional landscape catering to sophisticated investors, HNIs (high net worth individuals),  etc.," SEBI said. "The investment in foreign securities will be governed under FEMA, 1999." The portfolio manager must get positive client consent for the investment.

 

The regulator also proposed a PMS which invests only in mutual funds, based on representation from the industry. The "MF only PMS" framework is proposed to have a halved ticket size of INR 2.5 million. The minimum net worth of applicants can also be only INR 20 million, from INR 50 million for a full-fledged PMS. Additional simplifications were also proposed, along with waiving exit loads for exiting the PMS, as it would cause double charging, SEBI said. Existing portfolio managers can offer such a PMS through a separate investment approach with separate approval. 

 

The regulator also wants to allow more flexibility for investing in exchange-traded derivatives. The total exposure will be capped at 1.25 times the client's assets and unhedged short exposure could only be half of the assets, the consultation paper said. Option premium paid and received should not be more than 10% of the client's assets under management.

 

After receiving a representation, SEBI also mooted that independent fund managers could bring their own clients and manage client funds under the umbrella of a single registered PMS. The institution would provide fund managers with infrastructure and compliance requirements and would be ultimately legally responsible for the trades. The orders will also be executed through the PMS' centralised dealing desk or authorised system so that pre-trade checks are in place, the regulator proposed. 

 

"The relationship between the fund manager and the portfolio manager will be governed under an agreement. Under the agreement, the portfolio manager will be entitled to share fees/revenues with the fund manager as mutually agreed," the consultation paper said.  End

 

End

 

Reported by Aaryan Khanna

Edited by Saji George Titus

 

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