Sebi proposes allowing portfolio managers to invest overseas, in to-be-listed securities

Synopsis

India's markets regulator is looking to simplify compliance requirements for portfolio managers, aiming to broaden investment options to encompass overseas securities and unlisted debt. A novel group of portfolio managers will focus on high-net-worth individuals with reduced entry thresholds. The initiative also seeks to enhance the application of derivatives strategies for clients. Stakeholders are encouraged to provide feedback on these proposals by August 13th.

India's markets regulator has proposed easing compliance requirements for ​portfolio managers and expanding the ​investment avenues available to them, including to-be-listed securities, overseas listed ​equity and debt and unlisted debt.

The proposals aim to improve the ease of doing business and provide flexibility to portfolio managers, the Securities and Exchange Board of India said in a ‌consultation paper ⁠on Thursday.

Assets ⁠managed by India's portfolio management services industry have grown to 42.61 trillion rupees ($441.22 billion) as of May 31, 2026, from 18.07 trillion rupees in April 2019, prompting SEBI to undertake a comprehensive review of its rules.

"Considering the increasing sophistication of investors, growing demand for more personalised solutions and diverse investment portfolio, a need was felt to review ​the PM (portfolio manager) Regulations," the regulator said.

The move ⁠would allow portfolio ‌managers to invest in overseas securities, bringing them in ​line with mutual ​funds and alternative investment funds.

SEBI has also proposed that 10% of ⁠client funds be invested in unlisted debt, which is ​currently not allowed.

The regulator has invited comments on its proposals ​by August 13.

NEW CATEGORY OF PORTFOLIO MANAGERS

The regulator has recommended a new category of portfolio managers that will invest only in exchange-traded funds, mutual fund schemes and specialised investment funds that target affluent investors who do not meet the traditional investment threshold but can take on higher risk than retail investors.

The minimum ‌client investment size would be halved to 2.5 million rupees, while the net worth for such managers could be reduced to 20 ​million rupees, ​SEBI said.

Additionally, the regulator ⁠has proposed to widen the use of derivatives strategies by allowing exposure of up to 1.25 times of clients' assets.

SEBI is also exploring a model where independent ​fund managers operate under a registered platform, with the registered portfolio manager responsible for compliance and regulatory requirements.

Separately, it has recommended that if portfolio managers have assets of less than 1 billion rupees, they would not need to maintain a separate dealing room.

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