Don’t miss the latest developments in business and finance.

Markets regulator Sebi rolls out framework for portfolio managers

The rule mandates a portfolio manager to segregate each clients' funds and portfolio of securities and keep them separately from his own funds

Sebi
Sebi
Press Trust of India New Delhi
2 min read Last Updated : Sep 30 2022 | 8:02 PM IST

Markets regulator Sebi on Friday asked portfolio managers to put in place written down policy specifying role and responsibilities of teams engaged in fund as well as risk management with regard to management of client funds and securities.

The rule mandates a portfolio manager to segregate each clients' funds and portfolio of securities and keep them separately from his own funds and securities and be responsible for safekeeping of clients' funds and securities.

"Portfolio Managers shall put in place a written down policy which inter-alia detail the specific activities, role and responsibilities of various teams engaged in fund management, dealing, compliance, risk management, backoffice, etc., with regard to management of client funds and securities including the order placement, execution of order, trade allocation amongst clients and other related matters," Sebi said.

Also, portfolio managers will have to put in place a specific policy, which provide for specific situations (not generic) wherein the orders will be placed for each client individually or pooled from the trading account of the portfolio manager, the scenarios in which deviation from the allotment of securities as intended at the time of placement of order would be permissible, if at all.

Besides, they need to mention situations, wherein, the portfolio manager is required to place certain margins or collateral in order to execute certain transactions, details on how such margins or collaterals will be segregated from amongst various clients, without affecting the interest of any client.

Portfolio managers will have to constitute a dealing team (DT) which will be responsible for order placement and execution of all orders. DT may include the Principal Officer. Also, portfolio managers will have to ensure that DT is suitably staffed.

Also Read

For equity, equity-related instruments and mutual funds units, portfolio managers with assets under management of Rs 1,000 crores or more under discretionary and non-discretionary services, shall have in place an automated system with minimal manual intervention for ensuring effective funds and securities management including order management and allocation of securities to each client.

Portfolio managers will have to maintain an audit trail of all activities related to management of funds and securities of clients including order placement, trade execution and allocation. Further, there should be time stamping with respect to order placement, order execution and trade allocation.

The provision of the circular will become effective from April 1, 2023.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

More From This Section

Topics :SEBIPortfolio managers

First Published: Sep 30 2022 | 8:02 PM IST

Next Story