SEBI has issued the SEBI (Portfolio Managers) Regulations, 2020 in supercession of the SEBI (Portfolio Managers) Regulations 1993, which stand repealed with effect from 16 January 2020. The 2020 Regulations, amongst others, provide for the following :

• Enhanced eligibility criteria for Principal Officers and employees with decision making authority in managing clients’ portfolios. The role of the Principal Officer has also been defined clearly. Existing Portfolio Managers registered with the Board will have to comply with the enhanced eligibility criteria within 36 months.

• Mandatory employment by Portfolio Managers of a minimum of one person with defined eligibility criteria, in addition to the Principal Officer and Compliance Officer.

• Enhancement of net-worth requirement of Portfolio Managers from INR 2 Crores to INR 5 Crores. Existing Portfolio Managers are required to meet the enhanced requirement within 36 months.

• Increase in the minimum investment by clients of Portfolio Managers to Rs. 50 lakhs from Rs. 25 lakhs. Existing investments of clients may continue as such till the maturity of the investment or as specified by the Board.

• Discretionary Portfolio Managers 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, while non- discretionary/ or advisory portfolio managers may invest or provide advice for investments up to 25% of their assets under management (AUM) of such clients in unlisted securities, in addition to securities permitted for discretionary portfolio management. Portfolio Managers can invest in units of Mutual Funds only through direct plan.

• Mandatory appointment of custodian for all Portfolio Managers except those providing only advisory services to clients. Earlier, a custodian had to be appointed only by Portfolio Managers whose AUM was more than Rs. 500 crores.

• Off market transfers from/to clients’ accounts have been restricted with certain exceptions to facilitate operational convenience.

To refer to the SEBI (Portfolio Managers) Regulations 2020, click here.

Disclaimer

This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.