SEBI Expands Investment Options For Portfolio Managers
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SEBI has approved new rules to broaden portfolio management investment options, including mutual funds, IPOs, overseas securities and derivatives, while introducing changes to settlement procedures and fund management.
The Securities and Exchange Board of India (SEBI) has approved a new regulatory framework for portfolio managers. The changes are designed to broaden the range of assets that portfolio managers can manage.
Under the new framework, portfolio managers will be able to invest client money in direct mutual fund plans. These includes exchange-traded funds (ETFs), index funds and specialised investment funds (SIFs).
SEBI will introduce a Portfolio Managers’ Route for Investing in Mutual Fund Units (PRIM). The minimum investment under this route will be ₹25 lakh, while fixed management fees will be capped at 1% of assets under management.
Portfolio managers will also be permitted to invest in initial public offerings (IPOs) and primary debt-market issuances. Discretionary portfolio managers can allocate up to 10% of a client's assets under management to investment-grade, unlisted non-convertible debt securities.
Greater Access To Global Markets And Derivatives
The revised framework will give portfolio managers greater flexibility to invest in overseas securities. Permitted investments will include listed foreign equities and debt, REITs, overseas mutual funds, ETFs, index funds and foreign government securities.
The rules also expand the scope for investments in exchange-traded derivatives. Portfolio managers will be allowed exposure of up to 1.25 times a client's assets under management.
SEBI has also approved wider participation for foreign portfolio investors (FPIs) in exchange-traded commodity derivatives. FPIs will be able to trade non-agricultural index derivatives and certain non-cash-settled non-agricultural commodity derivatives.
New Settlement Framework And Independent Fund Managers
The revised PMS framework will also allow independent fund managers to manage client portfolios in association with registered portfolio managers. However, the registered portfolio manager will continue to carry responsibility for the independent fund manager's activities.
SEBI has separately approved changes to its settlement regulations. The new framework introduces a formula-based method for determining settlement amounts, taking into account factors such as the stage of proceedings, the seriousness of the violation, and mitigating or aggravating circumstances.
The regulator will also introduce a settlement notice before a show-cause notice. Entities will have 60 days to apply after receiving such a notice, while the time available to apply following a show-cause notice will increase from 60 to 90 days.
A fast-track settlement mechanism will be available for certain cases where the settlement amount does not exceed ₹10 lakh. Cases involving misrepresentation of financial statements or diversion of funds may also be settled, subject to regulatory and remedial conditions.
Also Read - JSW One Platforms Files ₹3,054-Crore IPO Papers With SEBI
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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