loading
loading
The Securities and Exchange Board of India (Sebi) board is likely to discuss an overhaul of portfolio management services (PMS) regulations, a common advertisement code and changes to settlement regulations at its meeting on 24 September, according to two officials familiar with the matter. The board is also likely to consider other proposals that the regulator has floated for public consultation in recent months, including measures to expand foreign portfolio investor (FPI) participation in non-agricultural commodity derivatives, depository receipts for real estate investment trusts (Reits) and infrastructure investment trusts (InvITs), and the regulatory framework for vault managers. In a consultation paper issued in July, Sebi proposed introducing mutual-fund-only PMS schemes, which would allow portfolio managers to offer professionally managed portfolios of mutual fund investments. Under the proposal, portfolio managers could exclusively manage client money in direct plans of mutual fund schemes, including exchange-traded funds and specialized investment funds, through a separate MF-PMS registration. PMS allows professional fund managers to manage customized investment portfolios for affluent investors, with the minimum investment currently set at ₹50 lakh. The consultation paper also proposed expanding the investment universe available to PMS firms. Portfolio managers could be permitted to invest client money in securities that are yet to be listed. Discretionary portfolio managers could also invest up to 10% of a client’s assets under management in investment-grade unlisted debt securities. The proposals would also allow access to overseas markets through investments in listed foreign equities, listed debt securities, overseas mutual funds, unit trusts investing in listed securities, as well as overseas real estate investment trusts. The Sebi board will discuss the regulator’s proposal in August to allow FPIs to participate in non-agricultural index derivatives. FPIs currently have access to non-agricultural commodity derivatives that are cash settled, while bullion and base-metal contracts are physically deliverable upon contract expiry. Sebi has proposed allowing them to participate in non-agricultural index derivatives irrespective of whether the underlying commodities are cash or physically settled. For physically settled non-agricultural commodities, FPIs would have to square off or roll over positions before the start of the tender or staggered delivery period, three days before expiry. If they did not do so, open positions could be automatically transferred to a designated trading member or trading-cum-clearing member’s proprietary account. Settlement framework The board is also likely to discuss changes to Sebi’s settlement framework. In August, the regulator issued a consultation paper proposing a review of the Sebi (Settlement Proceedings) Regulations, 2018. The review followed Sebi’s finding that in cases where settlement applications were rejected or withdrawn and the matter subsequently resulted in a penalty, the settlement amount averaged about eight times the final penalty. Under the proposed framework, Sebi expects the gap to narrow to about four times. The regulator has proposed replacing the existing method with a formula based on a base amount, adjusted for factors such as the stage of proceedings, regulatory history, aggravating circumstances and mitigating factors. The framework would also expand the range of mitigating factors that can be considered, potentially reducing the amount payable in deserving cases. Wrongful gains could now continue to be disgorged but would be excluded from the base-amount calculation. Sebi has also proposed a fast-track mechanism under which cases involving settlement amounts of up to ₹10 lakh would not be referred to the High Powered Advisory Committee. This would remove a layer of deliberation between the Internal Committee and whole-time members. The regulator has further proposed issuing settlement notices before initiating certain formal proceedings, giving parties an opportunity to settle earlier. Another agenda item is likely to be Sebi’s proposed common advertisement code for regulated entities, including mutual funds, brokers, investment advisers and research analysts. The regulator floated the proposal in June. Among the recommendations was allowing celebrity endorsements, on a pre-approved basis, for asset management companies. The provision is currently restricted to industry-level advertisements. Mint reported in July that the proposal has drawn criticism from some industry executives, who said that celebrity-led advertising could encourage investors to select fund houses based on familiarity and star appeal rather than investment performance, fund management capabilities or long-term track records. The board is set to also take up proposals relating to Reits, InvITs and vault managers. The market regulator, in August, proposed allowing Reits and InvITs to raise funds from foreign investors through depository receipts. While foreign investors can already invest in these instruments under India’s foreign investment rules, Sebi’s regulations do not specifically provide for the issuance of depository receipts for their units. The regulator has separately proposed expanding the scope of the Sebi (Vault Managers) Regulations, 2021. The framework was introduced for the secure and standardized storage of gold underlying electronic gold receipts traded on recognized stock exchanges. Sebi said that the market for physically backed precious-metal investment products has expanded significantly, with increased assets, trading activity and investor participation in gold and silver ETFs and physically settled derivatives. The regulator has said the vaulting of gold and silver underlying these products is currently outside its vault-manager framework. An emailed query to Sebi did not elicit a response till press time.
document fetched 2026-09-19 02:58 · canonical https://livemint.com/market/stock-market-news/sebi-board-meeting-pms-ad-code-settlement-rules-fpi-11789713674078.html