India’s market regulator has widened the investment toolkit for portfolio managers serving wealthy clients, allowing overseas securities, selected short positions and broader derivatives exposure.
India’s market regulator has opened a new chapter for the country’s portfolio management business, giving managers serving wealthy clients permission to invest overseas for the first time and to use certain short strategies as part of a wider loosening of the rulebook. The Securities and Exchange Board of India approved the changes after a board meeting, according to Bloomberg and other Indian business reports, in a move that reflects the rapid growth and increasing sophistication of the country’s privately managed money segment.
The shift affects an industry worth about $463 billion and marks a significant broadening of the tools available to portfolio managers. Under the revised framework, managers will be able to buy overseas securities, invest in unlisted debt and take exposure to exchange-traded derivatives worth up to 1.25 times clients’ assets, according to the regulator’s announcement. SEBI also said managers may take unhedged short positions within a set limit, though it did not spell out the exact cap in the material cited by Bloomberg. Reports in July had indicated that the regulator was weighing similar proposals after a consultation process aimed at modernising the sector’s rules.
The changes appear designed to bring portfolio management services closer to the flexibility already available to mutual funds and alternative investment funds. Indian market reports in July said SEBI’s draft had included overseas listed equities, foreign debt and foreign mutual funds or unit trusts, while also pointing to easier access to unlisted securities and unlisted debt. Other industry coverage said the regulator wanted to reduce compliance burdens and widen the range of permitted investments as assets under management in the portfolio management business continued to expand.
Additional reforms announced alongside the overseas investment changes further underline the regulator’s more liberal approach. According to Indian market coverage of the September rule update, SEBI also permitted portfolio managers to invest in non-agricultural commodity derivatives and introduced a new category for investing in mutual funds, including direct plans, with a minimum ticket size of ₹25 lakh. Taken together, the measures suggest a broader effort to make India’s wealth management framework more adaptable to domestic demand and international opportunities.
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