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Business News/ Markets / Stock Markets/  Sebi issues tighter norms for PMS to ensure effective funds management
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Sebi issues tighter norms for PMS to ensure effective funds management

The provisions of the Sebi’s circular dated September 30, 2022 will come into effect from April 1, 2023.

Sebi issues tighter norms for PMS to ensure effective funds management (MINT_PRINT)Premium
Sebi issues tighter norms for PMS to ensure effective funds management (MINT_PRINT)

Market regulator Securities and Exchange Board of India (SEBI) has asked portfolio managers to have specific policies with respect to the management of client funds including the order placement, execution of orders, trade allocation amongst clients and other related matters.

The provisions of the Sebi’s circular dated September 30, 2022 will come into effect from April 1, 2023.

Through these policies, investors of the PMS can know the specific situations (not generic) in which the orders will be placed for an individual investor or pooled from the trading account of the portfolio manager.

Investors will also get to know the scenarios/situations in which deviation from the allotment of securities as intended is allowed.

Further, portfolio managers are required to place certain margins/ collaterals in executing certain transactions. In such cases, details of how margins will be segregated amongst various clients will be provided by the PMS provider.

The regulator also mandated portfolio managers to ensure that the ‘dealing team’ which is responsible for order placement and execution has restricted access to mobile phones, computers and other devices to protect sharing of information.

Audit trail

As per the Sebi circular, portfolio Managers with assets under management (AUM) of 1000 crores or more under discretionary and non-discretionary services, must have an automated system with minimal manual intervention for ensurin effective funds and securities management.

They are also mandated to maintain an audit trail of all activities related to the management of funds including order placement, trade execution and

allocation. Further, time stamping with respect to order placement, order execution and trade allocation has to be maintained.

The APMI (Association of Portfolio Managers in India), which was incorporated on 31st December 2021, will take all the necessary steps for implementing the rules set by SEBI.

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Published: 30 Sep 2022, 09:30 PM IST
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