2 days ago
SEBI Opens PMS to Overseas Securities Under New Framework
SEBI has changed the rules for portfolio management services, or PMS.
Portfolio managers can now consider several types of investments outside India.
These include foreign shares, bonds, REITs, mutual funds, ETFs, index funds and government debt.
The investments must follow India's foreign-exchange rules.
PMS managers will also get more flexibility to invest in IPOs and some debt offerings.
Discretionary PMS may invest up to 10% of a client's assets in certain unlisted debt, but the client must agree.
The rules also allow exchange-traded derivatives exposure up to 1.25 times the client's assets.
SEBI says the shorter rulebook is intended to simplify compliance and develop the PMS industry.
SEBI will allow portfolio managers to invest client funds in several categories of foreign securities.
Permitted products include overseas equities, debt securities, REITs, mutual funds, ETFs, index funds and foreign government debt.
Such investments must comply with the Foreign Exchange Management Act, 1999 and the Reserve Bank of India's Liberalised Remittance Scheme.
The wider PMS overhaul also allows investments in IPOs, primary-market debt and certain unlisted debt securities with client consent.
The revised rules permit exchange-traded derivatives exposure of up to 1.25 times a client's AUM and reduce the rulebook from 70 to 33 pages.
- Who
- The Securities and Exchange Board of India (SEBI), portfolio managers and PMS clients.
- What
- SEBI approved a framework allowing PMS managers to access specified foreign securities and introduced other investment and compliance changes.
- Where
- The framework applies to portfolio management services in India and covers investments in overseas markets.
- When
- The timing is not specified in the article; the changes were described as newly approved.
- Why
- SEBI said the overhaul is intended to expand investment flexibility, develop the PMS industry, ease compliance and consolidate regulatory provisions.
Key facts
- Foreign products permitted
- Listed overseas equity, debt securities, REITs, overseas mutual funds, ETFs, index funds and foreign government debt.
- Foreign-exchange requirements
- Foreign investments must comply with the Foreign Exchange Management Act, 1999 and the Reserve Bank of India's Liberalised Remittance Scheme.
- Unlisted debt limit
- Discretionary PMS may invest up to 10% of a client's AUM in investment-grade, non-convertible, unlisted debt securities, subject to client consent.
- Derivatives limit
- Exchange-traded derivatives exposure may reach 1.25 times the client's AUM.
- Rulebook reduction
- The PMS regulations were reduced from 70 pages to 33 pages, a 53% reduction.
- Word-count reduction
- The revised rules reduce the word count by approximately 42%.
Sources
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