India’s markets regulator, Sebi, is weighing a comprehensive reform of portfolio management regulations aimed at increasing accessibility, simplifying offerings, and facilitating overseas securities trading, with key changes scheduled for discussion on 24 September.
India’s markets regulator is expected to weigh a sweeping overhaul of portfolio management rules at its board meeting on 24 September, as it looks to widen access, simplify offerings and align the segment more closely with other regulated investment products.
According to Business Standard, one of the main proposals would create a mutual fund-only portfolio management service with a lower entry threshold of ₹25 lakh, down from ₹50 lakh, while also easing the minimum net-worth requirement for applicants to ₹2 crore from ₹5 crore. The same package could allow portfolio managers to handle direct plans of mutual fund schemes and specialised investment funds, and to expand into overseas securities, exchange-traded derivatives and securities that are yet to be listed.
The regulator is also said to be considering a broader market-structure clean-up. That could include removing the mandatory appointment of a merchant banker for small private debt placements, introducing a credit risk-o-meter for debt disclosures and revisiting rules for real estate investment trusts and infrastructure investment trusts. A common advertisement code for all Sebi-regulated entities is also on the table, alongside an overhaul of settlement regulations, stronger technology standards for market infrastructure institutions and a review of margin trading rules.
Not every idea may make it through. Business Standard reported that a proposal to permit gift cards for mutual fund investments may be dropped because of concerns over misuse, while discussions on variable net-worth requirements for stock brokers appear to be continuing. The board may also revisit the accredited investor framework for alternative investment funds, with wider eligibility and manager-led accreditation under consideration, and could open the door for foreign portfolio investors to trade in non-agricultural index derivatives and some commodity derivatives. Sebi had not responded to emailed questions at the time of publication.
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