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The Securities and Exchange Board of India (Sebi) has proposed mandating distributors of portfolio management services (PMS) to register with the Association of Portfolio Managers in India (APMI).
Incorporated in December 2021, APMI is the industry body for PMS providers, which helps in policy formulation. It also acts as a vital link between portfolio managers, investors, and the regulator.
At present, registration for distributors is not mandatory. However, they are required to have specific certification from the National Institute of Securities Markets (NISM).
An ‘ease of doing business committee’ formed after the push from the finance ministry has recommended the registration.
Additionally, the panel has also given suggestions to iron out operational issues around disclosure of fee structures, and physical and digital onboarding.
Under the proposal, PMS would have to provide details on fixed fees in all cases of positive, negative, and no returns along with the calculation for single-year and multi-years.
“There should be no other cost for the investor other than the fees and charges specified in the annexure of fees in the agreement,” Sebi said.
The committee has also recommended providing a standard ‘most important terms and conditions’ document to clients by PMS and seeking their acknowledgment so that the investors don’t lose focus on terms in the voluminous documents.
Sebi recently mandated such curtailed terms and disclosures by stock brokers as well.
The markets regulator has sought comments on the proposals by March 7.
