SEBI Chief Says Updated PMS Norms Likely By Mid-2026

The Securities and Exchange Board of India (SEBI) is set to undertake a comprehensive review of its Portfolio Management Services (PMS) regulations, chairperson Tuhin Kanta Pandey said at a PMS conclave on Monday. A revised regulatory framework is expected to be implemented by mid-2026.

Pandey said the regulator intends to update the framework to ensure it remains effective, adaptable and aligned with changing market needs. A draft of the revised regulations will be released for public consultation before SEBI’s June 2026 board meeting.

The PMS industry currently manages about ₹10.5 lakh crore in assets, excluding Employees' Provident Fund Organisation (EPFO) and Provident Fund (PF), across nearly 2.15 lakh clients as of 31 January 2026. According to SEBI data, the sector has grown at a compound annual growth rate (CAGR) of 17%.

What Will Be The Focus Of SEBI's PMS Review?

SEBI will shift its focus from regulation, as it alone cannot strengthen the industry. Rather, it will incorporate governance standards, suitability practices, technology adoption, and ethical conduct to make the process transparent.

Pandey also added that investor suitability must remain central to the PMS model. Risk profiling, suitability assessment and client communication must be transparent, systematic and based on evidence.

He also raised concerns over the possibility of mis-selling by distributors, and he said that the industry has to be careful of this.

Will SEBI Allow ‘When Listed’ Trading?

Pandey also said SEBI’s senior officials are internally discussing the possibility of introducing a formal mechanism for trading in ‘when listed’ stocks. This mechanism would allow shares of initial public offerings (IPO) bound companies to be traded in the days preceding the opening of the public issue for subscription.

The proposal aims to curb activity in the unofficial informal trading market for IPO shares. The idea is similar to the ‘when issued’ trading segment in the sovereign bond market. It was first proposed by former SEBI chairperson Madhabi Puri Buch more than a year ago.

He clarified that any such mechanism would not extend to the entire unlisted space. It would be limited to the segment where SEBI has clear jurisdiction, specifically, companies that are in the process of listing.

What Does This Mean For Investors?

The upcoming PMS overhaul indicates a more rigorous regulatory view and potential alterations in suitability standards, disclosure and regulatory demands on portfolio managers.

At the same time, a formal ‘when listed’ trading platform could bring greater transparency to IPO-bound stocks. This minimises dependency on informal trading market signals, which often drive speculative pricing before listings.

While regulatory tightening can increase compliance requirements for intermediaries, it can reduce investors' risk and increase market discipline in wealth management and primary market participation.

Sources:

The Times of India
Economic Times