SEBI makes mandatory registration of PMS
distributor with APMI
In a significant move aimed at enhancing oversight
and streamlining operations in the financial sector, the Securities and
Exchange Board of India (SEBI) has made it compulsory for Portfolio Management
Services (PMS) providers to register with the Association of Portfolio Managers
in India (APMI). This decision, announced recently by SEBI, is part of a
broader initiative to promote collective oversight of PMS distributors,
ultimately fostering a more efficient and transparent business environment for
portfolio managers.
Motive behind the move
The move is aimed at promoting ease of doing
business initiatives for portfolio managers. The new directive would come into
effect from January 1, 2025, and APMI would issue the criteria for registration
of distributors by July 1, this year, SEBI said in a circular.
"In order to facilitate collective oversight of
PMS (Portfolio Manager Services) distributors at the industry level, it has
been decided that any person or entity involved in the distribution of
portfolio management services shall obtain registration with APMI," SEBI said.
What did SEBI say to Portfolio Managers
Portfolio Managers have been asked to ensure that
any person or entity engaged in the distribution of its services has obtained
registration with APMI, in accordance with the criteria laid down by APMI.
This is in line with the practice already being
followed in the mutual fund industry, wherein, mutual funds distributors are
required to register with the Association of Mutual Funds in India (AMFI) and
obtain an ARN (AMFI Registration Number) for providing distribution services.
Currently, persons engaged by a portfolio manager to
act as a distributor of the PMS are required to obtain certification from the
National Institute of Securities Markets (NISM).
Further, portfolio managers are required to ensure
that distributors abide by the Code of Conduct specified under portfolio
managers' rules.
Benefits of mandatory registration
The mandatory registration with APMI is expected to
bring several benefits, including a more straightforward compliance process,
access to industry data, improved interaction between portfolio managers and
distributors, and expedited grievance redressal mechanisms. This move is a step
towards enhancing the overall efficiency and transparency of the PMS sector,
aligning with SEBI's commitment to promoting best practices and regulatory
compliance in the financial industry.
Last year, APMI had introduced a distributor
registration portal through which individuals can obtain APMI Registration
Number (APRN) to sell PMS. The registration was voluntary for existing PMS
distributors.
www.business-standard.com
dt. 06-05-2024