SEBI Board Meet: PMS Revamp, Wider FPI Access, Settlement Rules on Agenda

India’s market regulator Securities and Exchange Board of India (SEBI) is expected to take up about a dozen proposals at its board meeting this week, including a comprehensive revamp of Portfolio Management Services (PMS) rules, a review of settlement norms and measures to widen the accredited investor framework. Other proposals under review include a common advertising code and permission for REITs and InvITs to raise foreign capital through depository receipts, according to multiple reports.

The regulator is likely to consider a major overhaul of the PMS framework that would broaden investment choices and ease entry and compliance. SEBI considers if PMS managers should be allowed to invest in foreign securities, including listed overseas equities and debt, as well as overseas mutual funds investing in listed equities, debt and REITs, subject to FEMA, Liberalised Remittance Scheme limits with explicit client consent. Investments in to-be-listed securities could be allowed and discretionary PMS managers enabled to invest up to 10 percent of client assets under management in investment-grade unlisted debt.

Demat portability, digital disclosure documents, simpler reporting, relaxed dealing-room and qualification requirements and easing of power-of-attorney norms are among other proposals. FPIs could be allowed in physically deliverable non-agricultural commodity derivatives, where they would have to square off or roll over positions three days before the delivery period. The proposal involving settlement framework review will link the base settlement amount to the minimum penalty prescribed under securities laws. A fast-track settlement route for cases involving amounts up to Rs 10 lakh, and extension of the application deadline from 60 to 90 days feature among other proposals. The proposed framework for Common Advertising Code reportedly ensures unified norms for stock brokers, mutual funds, portfolio managers, investment advisers, research analysts and other intermediaries.

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