The Securities and Exchange Board of India (Sebi) will do a comprehensive review of its Portfolio Managers Regulations 2020 and a consultation paper on this will likely be released by June. The aim is to ensure that the framework remains effective, adaptive, and aligned with evolving market dynamics, Chairman Tuhin Kanta Pandey said.
“…there are certain things that need to be rationalised,” he said while speaking at the Portfolio Management Services (PMS) Conclave.
What did SEBI say?
Sebi also said that it has completed reviewing similar regulations for mutual funds and stock brokers. Pandey emphasised the need for strong internal controls, clear segregation across business units, and disciplined documentation to improve governance standards and focus on investor suitability.
Managing concentrated and high-stake PMS requires strong internal controls, clear segregation across business units, disciplined documentation, with staffing that matches scale and complexity of business, the markets regulator said. Differentiation of mutual funds, PMS, and newer offerings such as specialized investment funds (SIFs) is necessary, he added.
What did Mayur Shah say?
Mayur Shah, PMS fund manager at Anand Rathi Securities, said that for additional investment, a person should be allowed to invest any amount without the minimum threshold of ₹50 lakh. Shah said that digital onboarding, if allowed for non-resident Indian investors, will reduce the operational challenges and speed up setting up an account.
He also suggested that more benchmarks should be provided for comparison of returns and also allowing common certification for distributors selling PMS, alternative investment funds, systematic investment fund, and mutual funds.
Sebi has adopted a number of measures to strengthen the PMS ecosystem, including the issuance of uniform guidelines to manage inflow and outflow of client assets, simplification of disclosure documents, and streamlined digital onboarding.
The PMS industry saw robust growth over the last many years, with assets under management doubling to ₹10.5 lakh crore as of January 31, translating to around 17% compound annual growth rate since FY21. The industry’s total clients grew 50% to 2.15 lakh as on January from 2022.