SEBI on Wednesday doubled the minimum investment amount in portfolio management services to Rs.50 lakh. However, it said that existing investors may continue to stay invested till the last date of PMS agreement.
The regulator has also enhanced the minimum net worth of a portfolio manager to Rs.5 crore from Rs.2 crore while it has allowed a 3-year gap to existing portfolio managers to meet these requirements.
“The increase in investment limit and net worth criteria are likely to slow down the growth seen by the PMS industry since the market of potential investors will reduce with the doubling of the minimum investment amount to ₹50 lakh. The increase in net-worth requirements to ₹5 crores will also limit the number of new/existing businesses that want to obtain/retain the SEBI PMS registration” said Anish Teli, Founder of IndexAlpha.
In order to safeguard the interest of investors the market regulator directed discretionary portfolio managers to invest only in listed securities, money market instruments, units of mutual funds and such other securities/instruments as specified by SEBI from time to time. Meanwhile, SEBI has instructed non-discretionary/ advisory portfolio managers to invest not more than 25% of their AUM in unlisted securities.
Besides, it has made it mandatory for all portfolio managers to appoint a custodian excluding those providing only advisory services to clients.
To facilitate operational convenience SEBI has restricted off-market transfers from and to clients’ accounts with certain exceptions.
