In August 2019, SEBI had issued consultation paper on proposed changes to SEBI (Portfolio Managers) Regulations, 1993. Click here to read more.
On November 20, 2019, SEBI Board, in its meeting approved issuance of SEBI (Portfolio Managers) Regulations, 2019.
Some of the key changes approved by SEBI in the proposed SEBI (Portfolio Managers) Regulations, 2019 are:
- The eligibility criteria has been changed and the role of Principal Officer (PO) is clearly defined. The PO will be responsible for the overall supervision of the operations of the portfolio manager.
- The enhanced eligibility criteria for PO will also be applicable to any employee with decision making authority relating to management of the clients’ portfolios.
- A Portfolio Manager has to employ minimum one person with defined eligibility criteria in addition to Principal Officer and Compliance Officer.
- Net worth requirement increased from Rs. 2 Crores to Rs. 5 Crores. Existing Portfolio Managers will have to fulfill this requirement within 36 months.
- Minimum investment by clients of Portfolio Managers increased from Rs. 25 lakhs to Rs. 50 lakhs. Existing investments of clients may continue as such till end date of the PMS Agreement or as specified by the Board.
- Discretionary Portfolio Managers will be able to invest only in listed securities, money market instruments, units of Mutual Funds and such other securities/ instruments as specified by SEBI from time to time.
- Non-discretionary/ Advisory Portfolio Managers can invest not more than 25% of their AUM in unlisted securities.
- Appointment of custodian will be mandatory for all the Portfolio Managers except for those providing only advisory services to clients.
- There will be restrictions on off-market transfers from/to clients’ accounts with certain exceptions to facilitate operational convenience.
Further communication on the regulations is expected from SEBI anytime soon.
Click here to view the press release by SEBI.
The draft of proposed regulations is available on SEBI’s website. Click here to read the same.
Does PMS documentation require physical signatures? I read somewhere that POA needs to be wet signature.
Also, POA would only be needed in case of discretionary PMS, no non-discretionary- correct?
POA can have a digital signature approved under the Information Technology Act. POA will be required under discretionary PMS as you will be transacting on behalf of the client. Hope this helps.
Hi,
If I want to provide investment advice only to NRI’s , do I still have to register as s RIA?
Hi, yes. SEBI has given exemption to advisers who provide investment advice exclusively to clients based out of India. Persons providing investment advice to Non-Resident Indian or Person of Indian Origin will fall within the purview of these regulations
Hello,
I wanted to know what does SEBI consider as “relevant experience” for the PMS manager role?
Hi Mohit, the experience should be in the securities market including as a portfolio manager, stock broker, investment advisor or as a fund manager.