MUMBAI: The Securities and Exchange Board is comprehensively reviewing the portfolio managers (PMS) regulations by strengthening investor protection and governance on one hand and simplifying business processes for portfolio managers on the other so that the regulations remain relevant for evolving market dynamics.
Chairman Tuhin Kanta Pandey said Monday that the Securities and Exchange Board is looking at a comprehensive review of the portfolio managers regulations 2020, to keep the framework effective, adaptable, and aligned with evolving market dynamics or stated differently to have "optimum regulation," by easing unnecessary frictions while strengthening investor protection.
“We propose to carry out a comprehensive review… so that the framework remains effective, adaptable, and aligned with evolving market dynamics,” Pandey said addressing a PMS industry event hosted by the Sebi-run National Institute of Securities Markets here Monday. He as like in other regulations, in the PMS changes too Sebi will first come out with a consultation paper for public input on the proposed changes.
He further said the PMS review will mirror recent regulatory reassessments undertaken in areas such as listing obligations, disclosure requirements, and mutual funds. He also said new PMS regulations will focus on rationalization based on industry and investor feedback.
But when later asked if Sebi is considering changes to minimum investment thresholds for PMS, especially in light of the introduction of specialised investment fund structures positioned between mutual funds and PMS offerings, he parried the question.
When asked whether the Sebi will push for a review of long-term capital gains (LTCG) tax to help stabilise markets amid global volatility, Pandey clarified that the matter falls outside Sebi’s remit. Pandey further said the regulator plans to revisit the PMS regulations o 2020, noting that certain provisions of the six-year-old framework require rationalisation.
Pandey also confirmed that Sebi has received representations from stock brokers highlighting operational challenges arising from revised lending norms proposed by the Reserve Bank.
The central bank has proposed that, effective April 1 tanks should not lend for proprietary trading by brokers. Most other funding to brokers should be backed by 100% collateral.
Sebi is examining the concerns and will take them up with the RBI, Pandey said but refrained from detailing the regulator’s position, noting that brokers have identified “three to four” key issues.
Pandey also said Sebi is working with ministries concerned to reassess the continuing ban on futures trading in certain agricultural commodities.
Highlighting technology adoption, he added the regulator has begun deploying artificial intelligence–based surveillance systems to monitor market activity, including tracking financial influencers to ensure they do not cross regulatory lines into unregistered investment advice.
Responding to reports about disciplinary action against a senior official, Pandey acknowledged that “initial action” was taken after vigilance findings pointed to serious lapses.
On the proposed development of the corporate bond index, he said this is a joint effort between Sebi and RBI, with the product falling under both jurisdictions due to trading on exchanges and the nature of the involved area.