In a notable move aimed at bolstering regulatory supervision within India's financial landscape, the Securities and Exchange Board of India (SEBI) has introduced a new directive mandating collective vigilance over distributors of Portfolio Management Services (PMS) through the Association of Portfolio Managers in India (APMI).
Under the purview of Regulation 23(11) of the SEBI (Portfolio Managers) Regulations, 2020, the circular imposes extra compliance obligations on portfolio managers. They are now required to ensure that all entities involved in disseminating their services adhere rigorously to SEBI's regulatory statutes and circulars.
Additionally, portfolio managers are tasked with ensuring that their distributors adhere strictly to the specified Code of Conduct described in Annexure 2B of the Master Circular, dated March 20, 2023.
This regulatory evolution stems from a comprehensive review initiated by a designated working group. Tasked with fine-tuning the existing regulatory framework under SEBI (Portfolio Managers) Regulations, 2020, the working group's recommendations underwent a public consultation process, leading to the formulation of the current directive.
In a bid to streamline regulatory oversight, SEBI has mandated that any entity involved in disbursing portfolio management services must obtain registration with APMI. Portfolio managers are entrusted with ensuring that their network of distributors complies meticulously with APMI's stipulated criteria for registration.
Scheduled to come into effect on January 01, 2025, this circular underscores a phased approach to implementation, with APMI set to unveil the criteria for distributor registration by July 01, 2024.
Empowered by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and fortified by Regulation 43 of SEBI (Portfolio Managers) Regulations, 2020, this circular serves as a robust mechanism aimed at safeguarding investor interests and fostering market integrity.
SEBI's resolute move to institute collective oversight of PMS distributors through APMI underscores its commitment to fortifying regulatory mechanisms within India's financial landscape. As the financial sector braces for this paradigm shift, stakeholders are urged to embrace the prescribed directives, poised to reshape the dynamics of regulatory oversight.
This circular is accessible on the SEBI website, nestled within the "Legal -> Circulars repository. Here is the link to read.
