Sebi Board Meeting: PMS Overhaul, Easier Settlements, New Ad Code Among Key Changes

Market regulator Securities and Exchange Board of India (Sebi) has approved a new framework for portfolio managers that will allow them to invest in initial public offerings (IPOs), primary debt issuances, foreign securities and direct mutual fund plans, while easing several compliance requirements.

The Sebi Board, at its meeting on September 24, approved the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, replacing the 2020 regulations. The new framework is aimed at developing the PMS industry, easing compliance and removing redundant provisions.

PMS Gets Wider Investment Options

Under the new rules, portfolio managers can invest in IPOs and primary issuances in the debt market. Discretionary PMS can invest up to 10 per cent of client AUM in investment-grade, non-convertible, unlisted debt securities, subject to client consent. Investment in exchange-traded derivatives will be permitted up to 1.25 times client AUM.

PMS can also invest in foreign securities, including listed equity and debt, real estate investment trusts (Reits), overseas mutual funds, exchange traded funds (ETFs), index funds and foreign government debt, subject to Foreign Exchange Management Act (FEMA) and the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS).

Sebi has also introduced the Portfolio Managers Route for Investing in Mutual Fund units, or PRIM. It will allow portfolio managers to invest client money in direct plans of mutual funds, including ETFs, index funds and Specialized Investment Funds (SIFs).

The minimum ticket size will be Rs 25 lakh. A new PRIM-only applicant will require a net worth of Rs 2 crore. Management fees will be capped at 1 per cent of client AUM, although performance-based fees will be allowed. Investments in schemes of affiliated, group or associate AMCs will be capped at 25 per cent.

Sebi will also introduce Independent Fund Managers, who can manage portfolios in association with registered portfolio managers. The registered portfolio manager will retain full responsibility and liability for their activities.

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