Sebi Proposes MF-Only PMS, Lowering Investment Threshold
By Business Desk
Sebi introduces a new MF-only PMS with a ₹25 lakh minimum investment, broadening access to professional portfolio management for affluent investors in India.
The Securities and Exchange Board of India (Sebi) has proposed a comprehensive overhaul of its portfolio management regulations. These significant changes introduce a new mutual fund-only portfolio management service (MF-PMS) and broaden investment avenues for managers.
Introducing the Mutual Fund-Only PMS
One core proposal is the creation of an MF-PMS category, designed to enhance accessibility to professionally managed mutual fund portfolios for affluent investors. This new service aims to simplify professional investment management.
- Minimum investment threshold reduced to ₹25 lakh, significantly lower than the standard ₹50 lakh for regular PMS.
- Net worth requirement for MF-PMS applicants set at ₹2 crore.
Expanding Investment Avenues for Portfolio Managers
Sebi also seeks to expand the range of assets portfolio managers can invest in, providing greater flexibility and diversification opportunities. This move aims to align Indian portfolio management with global practices.
- Investments permitted in to-be-listed and unlisted securities.
- Inclusion of overseas assets, such as listed foreign equities, debt securities, and overseas mutual funds.
- Increased flexibility for exchange-traded derivatives, allowing total exposure up to 1.25 times a client’s assets under management.
Streamlining Compliance and Operational Requirements
Beyond investment expansion, the draft paper outlines several key compliance reforms to streamline processes and operational ease. These adjustments aim to improve regulatory efficiency and market functioning.
- Redefining the definition of net worth for portfolio managers.
- Requirement to maintain a portion of net worth in liquid assets.
- Allowance for digital disclosure documents and simplified reporting formats.
- Relaxed operational requirements for smaller portfolio managers, specifically those managing less than ₹100 crore or fewer than 10 clients.
These proposals are currently open for public comments, with the deadline set for August 13. The Securities and Exchange Board of India continues to solicit feedback from stakeholders on these significant regulatory adjustments.