Consultation paper on easing business initiatives for Portfolio Managers

In a bid to streamline operations and reduce compliance burdens in the financial sector, the Securities and Exchange Board of India (SEBI) has released a consultation paper on easing business initiatives for Portfolio Managers. The objective is clear: to invite feedback and suggestions from the public regarding proposed measures aimed at enhancing the ease of doing business for Portfolio Managers.

Background and Objectives
The Portfolio Management Services (PMS) are presently governed by the SEBI (Portfolio Managers) Regulations, 2020, along with related circulars. Following the Finance Minister’s budget announcements for FY 2023-24, emphasizing simplification and cost reduction in compliance, SEBI has taken proactive steps towards achieving these objectives.

SEBI constituted various working groups to review existing frameworks and recommend measures for simplification. Among these, the Ease of Doing Business (EODB) working group focused on PMS Regulations. The consultation paper arises from the recommendations of this group and seeks to gather public opinion on proposed initiatives.

Key Proposals for Public Consultation

  1. Facilitating Collective Oversight of PMS Distributors
    The consultation paper proposes mandating registration with the Association of Portfolio Managers in India (APMI) for PMS distributors. This move aims to bring regulatory benefits and streamline processes for both distributors and Portfolio Managers.
  2. Enhancing Digital Onboarding Processes
    Recognizing the challenges in the digital onboarding process, particularly regarding fee disclosures, SEBI proposes several measures. These include ensuring clarity of fee structures through handwritten or typed acknowledgments and providing comprehensive fee illustrations.
  3. Introduction of Most Important Terms and Conditions (MITC)
    To enhance transparency and clarity in the PMS-client relationship, SEBI proposes the introduction of a standardized “Most Important Terms and Conditions” document. This document aims to highlight critical aspects of the relationship in a concise manner, ensuring better understanding for clients.

Seeking Public Feedback
SEBI invites public comments on the proposed initiatives outlined in the consultation paper. Stakeholders are encouraged to provide feedback through the designated online platform by March 07, 2024.

Conclusion
The consultation paper by SEBI underscores the regulator’s commitment to fostering a conducive environment for Portfolio Managers. By soliciting public feedback, SEBI aims to ensure that regulatory reforms align with industry needs while promoting transparency and efficiency in the financial sector. It’s a step towards a more robust and business-friendly regulatory framework, ultimately benefiting both investors and market participants alike.

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