SEBI issues instructions for portfolio managers:
To begin with, on 16th Jan 2020, the market regulator SEBI (Security and Exchange Board of India) issues instructions for portfolio managers. Additionally, some mandatory changes applicable to the portfolio managers by the regulatory framework.
As per the SEBI notification, the PMS regulation of Regulation 22 (11), any upfront fees don’t applicable for the portfolio managers. Moreover, the expensive charges will apply to clients by the stock brokerages.
The operating expenses would not apply to the stock brokerage. These charges and other fees applicable to portfolio managers or management services. These charges should not over 0.50% per annum from the clients AUM.
In the first 3 years, the exit load for the investor portfolio 1% to 3% from the investment. But, after completing 3 years nil exit load charges will be applicable. Completely 20% of charges will apply by both self and associate transactions in a year.
The regulator needs to provide a direct boarding to investors without any brokerages in distribution services. Due to this direct boarding, only statutory charges will apply for the investors.
Furthermore, the market regulators declared the details about the ‘Investment Approach’. It was provided by the portfolio managers. The types of regulatory instructions and marketing materials of the portfolio managers should be uniform.
Also, they need to provide a certificate from the qualified CAs as of 31 March based on the audit accounts. It needs to complete within 6 months from the financial year ending. This circular will be applicable from May 1.