SEBI PMS Rules 2026 Allow IPO, Foreign Investments And ₹25 Lakh MF-Only Route
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The changes are part of SEBI’s wider review of PMS regulations, alongside broader FPI access to non-agricultural commodity derivatives and a common advertisement code for the securities market.
The Securities and Exchange Board of India (SEBI) has approved a new regulatory framework for portfolio management services (PMS), allowing portfolio managers to invest in initial public offerings (IPOs), foreign securities and primary debt issuances.
The new PMS rules also introduce a separate route for investing in direct mutual fund schemes and specialised investment funds (SIFs), with a minimum investment of ₹25 lakh. Existing PMS players can offer this route through a separate investment approach.
SEBI has also allowed discretionary PMS managers to invest up to 10% of a client's assets under management in investment-grade unlisted debt securities with the client's consent. The framework provides greater flexibility for investments in exchange-traded derivatives, with exposure allowed up to 1.25 times the client's AUM.
SEBI expands PMS investment options
Under the revised PMS regulations, portfolio managers can participate in IPOs and primary market issuances in the debt market. They can also invest in foreign securities, including listed equity and debt, overseas mutual funds, ETFs, index funds, REITs and foreign government debt, subject to applicable foreign exchange rules.
The new framework also permits greater use of exchange-traded derivatives. For discretionary PMS, exposure can go up to 1.25 times the client's AUM.
PMS managers can additionally invest up to 10% of a client's AUM in investment-grade, non-convertible, unlisted debt securities, provided the client gives consent.
The changes replace the existing 2020 PMS regulations. SEBI has also simplified the language of the regulations and removed provisions it considered redundant.
SEBI introduces ₹25 lakh MF-only PMS route
SEBI has introduced the Portfolio Managers Route for Investing in Mutual Fund Units, or PRIM. The new route will allow portfolio managers to invest client money in direct plans of mutual funds, including ETFs, index funds and specialised investment funds offered by Indian asset management companies.
The minimum investment under PRIM will be ₹25 lakh, while portfolio managers operating under the route will need a minimum net worth of ₹2 crore.
Existing portfolio managers can offer PRIM as a separate investment approach, while entities that want to operate only under this framework can apply for a separate portfolio manager registration.
SEBI has also capped investments in schemes of affiliated, group or associate asset management companies at 25% under PRIM. Fixed management fees will be capped at 1% of client AUM, while performance-based fees will also be allowed.
The new PMS framework is aimed at expanding the investment options available to portfolio managers while simplifying some regulatory and compliance requirements. The changes were approved at SEBI's board meeting on September 24.
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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
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
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