Context
SEBI has released a consultation paper proposing a comprehensive overhaul of the Portfolio Management Services (PMS) Regulations, 2020. The reforms aim to expand the investment universe, simplify regulations, improve investor protection and align PMS rules with evolving capital market practices.
Explanation:
- The Securities and Exchange Board of India (SEBI) is a statutory body responsible for overseeing and regulating the securities markets in India.
- Portfolio Management Services (PMS) are customised investment services where a SEBI-registered Portfolio Manager manages securities on behalf of high-net-worth investors.
- PMS is regulated under the SEBI (Portfolio Managers) Regulations, 2020 and currently requires a minimum investment of ₹50 lakh per client.
- Portfolio managers have discretionary, non-discretionary and advisory mandates based on investor preferences.
- SEBI has proposed allowing investments in overseas listed securities, to-be-listed securities and limited exposure to unlisted debt instruments to widen investment opportunities.
- The reforms seek to harmonise PMS regulations with Alternative Investment Funds (AIFs) and Mutual Funds, while strengthening disclosure, governance and risk management.
- PMS differs from Mutual Funds as portfolios are individually managed rather than pooled.
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