Sebi greenlights sweeping reforms for portfolio managers and settlement rules

The Securities and Exchange Board of India (Sebi) announced an extensive revamp of portfolio manager regulations, creating a dedicated route (PRIM) that enables managers to place client funds in direct mutual fund units and specialised investment funds, subject to a ₹25 lakh minimum investment. Existing managers may now allocate up to 10 % of assets under management to investment-grade unlisted debt securities on a discretionary basis, provided clients agree, and they can also participate in IPOs, primary debt issuances and exchange-traded derivatives.

The regulator simplified the language of the rules and removed redundant clauses. Settlement Proceedings Regulations were also restructured, introducing a new settlement-amount formula, separate treatment of wrongful gains, and a fast-track process for disclosure-related violations up to ₹10 lakh. Entities will receive a settlement notice before a show-cause notice, with a 60-day window to apply, except when an interim order is expected.

Foreign portfolio investors are now allowed to trade non-agricultural index and commodity derivative contracts, though they must unwind positions before delivery on non-cash-settled contracts. Sebi also relaxed record-keeping requirements for research analysts and approved a common advertisement code permitting celebrity endorsements, while removing several prior approval mandates.