SEBI issues circular for portfolio managers.

LegalitySimplified

The Securities and Exchange Board of India on 30th September 2022, directed the Portfolio Managers to put in place a written down policy (“policy”), in compliance with the PMS Regulations and circulars issued thereunder, 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.

Portfolio Managers shall also put in place a specific policy, in compliance with the PMS Regulations and circulars issued thereunder, which inter-alia shall provide for the following:

  • Specific situations (not generic) wherein the orders shall be placed for each client individually or pooled from trading account of Portfolio Manager.
  • Scenarios / situations in which deviation from the allotment of securities as intended at the time of placement of order would be permissible, if at all.
  • Scenarios, wherein, the Portfolio Manager is required to place certain margins / collaterals in order to execute certain transactions, details on how such margins / collaterals shall be segregated / placed from amongst various clients, without affecting the interest of any client.
  • Deviations, if any, shall be on account of exigency only and require prior written approval of the Principal Officer and Compliance officer of the Portfolio Manager with a detailed rationale for such deviation.

Further, the Portfolio Managers shall constitute a dealing team (DT) which shall be responsible for order placement and execution of all orders in accordance with the aforesaid policies of the Portfolio Manager.

Portfolio Managers with assets under management of INR 1000 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.

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