 "Sebi")
In a significant move aimed at enhancing oversight and streamlining operations in the financial sector, the Securities and Exchange Board of India (Sebi) has made it compulsory for Portfolio Management Services (PMS) providers to register with the Association of Portfolio Managers in India (APMI). This decision, announced recently by Sebi, is part of a broader initiative to promote collective oversight of PMS distributors, ultimately fostering a more efficient and transparent business environment for portfolio managers.
Motive behind the move
The move is aimed at promoting ease of doing business initiatives for portfolio managers. The new directive would come into effect from January 1, 2025, and APMI would issue the criteria for registration of distributors by July 1, this year, Sebi said in a circular.
"In order to facilitate collective oversight of PMS (Portfolio Manager Services) distributors at the industry level, it has been decided that any person or entity involved in the distribution of portfolio management services shall obtain registration with APMI," Sebi said.
What did Sebi say to Portfolio Managers
Portfolio Managers have been asked to ensure that any person or entity engaged in the distribution of its services has obtained registration with APMI, in accordance with the criteria laid down by APMI.
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This is in line with the practice already being followed in the mutual fund industry, wherein, mutual funds distributors are required to register with the Association of Mutual Funds in India (AMFI) and obtain an ARN (AMFI Registration Number) for providing distribution services.
Currently, persons engaged by a portfolio manager to act as a distributor of the PMS are required to obtain certification from the National Institute of Securities Markets (NISM).
Further, portfolio managers are required to ensure that distributors abide by the Code of Conduct specified under portfolio managers' rules.
Benefits of mandatory registration
The mandatory registration with APMI is expected to bring several benefits, including a more straightforward compliance process, access to industry data, improved interaction between portfolio managers and distributors, and expedited grievance redressal mechanisms. This move is a step towards enhancing the overall efficiency and transparency of the PMS sector, aligning with Sebi's commitment to promoting best practices and regulatory compliance in the financial industry.
Last year, APMI had introduced a distributor registration portal through which individuals can obtain APMI Registration Number (APRN) to sell PMS. The registration was voluntary for existing PMS distributors.
