InvestorQ : What are the highlights of the modifications made by SEBI to the Portfolio Management Services (PMS) rules?
sara Kunju made post

What are the highlights of the modifications made by SEBI to the Portfolio Management Services (PMS) rules?

Answer
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9 months ago


Let me broadly summarize the key changes to the regulations pertaining to PMS services. These PMS services have been seeing changed rules to make them safer and more representative of the risk entailed.

· The minimum investment for eligible PMS investors to be enhanced from Rs.25 lakh to Rs.50 lakh. However, the existing investments of clients may continue till the end date of the PMS Agreement, post which the new rules will apply.

· Going ahead, the discretionary Portfolio Managers will only be permitted to invest in listed securities, money market instruments and units of mutual funds. Any investments in unlisted instruments and structures will not be allowed.

· Non-discretionary and Advisory Portfolio Managers will be allowed to invest not more than 25% of their AUM in unlisted securities. However, this will have to be subject to proper checks and balances and prior approvals.

· Off market transfers from or to clients’ accounts are restricted with certain exceptions to facilitate operational convenience. Any blanket use of POA or power of attorney will not be allowed in the case of PMS.

· Appointment of custodian will be mandatory for all portfolio managers except for those providing only advisory services to clients. All share account will have to be mandatorily handled by the custodians only.

Overall the new rules are designed to facilitate greater transparency and openness in the PMS system.