## Christmas Comes Early: SEBI’s Consultation Paper Is Basically Santa’s Sack for the PMS Industry 🎅
Forget the calendar -for the PMS industry, Christmas has arrived in July this year, and Santa is wearing a SEBI badge. On July 23, 2026, the regulator dropped its consultation paper on the comprehensive review of the Portfolio Managers Regulations, 2020, and honestly, it reads less like a regulatory document and more like a very well-organised wish list finally being granted. Comments close “August 13, 2026” – so if you’ve been nice (or at least compliant) this year, now’s the time to write back as Santa is in a good mood.
First, the numbers, because even Santa needs a business case: PMS AUM has grown from ₹18.07 lakh crore in 2019 to ₹42.61 lakh crore in May 2026, and the number of portfolio managers has more than doubled to 515. The industry has clearly been on its best behaviour, and the regulator has noticed.
Presents under the tree (new investment avenues):
– “To be listed” securities are now allowed. No more standing outside the listing gate with your nose pressed against the glass – you can get in before the doors officially open.
– DPMS gets a stocking stuffer of unlisted debt – up to 10% of AUM in investment-grade paper. Small gift, but discretionary managers will take it.
– Foreign securities, finally unwrapped. Listed equity, debt, and overseas funds, subject to FEMA and explicit client consent. Global diversification, no more relying on a client’s personal LRS limit and a prayer.
– A brand-new toy in the box: MF-only PMS. Lower ticket size (₹25 lakh), lower net worth (₹2 crore), lighter Principal Officer requirements, optional dealing room. It’s PMS-lite – assembly required, but no batteries needed. Fees capped at 2.5% fixed, performance fees allowed too, which is exactly the kind of gift that comes with an instruction manual (see Consultation 8).
– Derivatives get a longer leash – total exposure up to 1.25x AUM, with caps on unhedged shorts and options premium, so this is less “off the leash entirely” and more “longer leash, still a leash.”
Stocking fillers (ease of compliance – the small gifts that actually matter):
– Disclosure documents can now go fully digital. Somewhere, a filing cabinet is being quietly retired.
– Timelines shift from 7 working days to 10 calendar days across several provisions – SEBI clearly got tired of everyone’s “wait, does Saturday count?” emails.
– Net worth gets redefined more sensibly, with 10% required in liquid assets.
– Small PMs (fewer than 10 clients or AUM under ₹100 crore) may skip the dedicated dealing room requirement – proportionality, wrapped and delivered.
– Compliance Officers finally get a defined qualification bar (NISM Series-III-C) – one fewer thing to argue about at the next hiring committee meeting.
The lump of coal (because Santa’s list has two columns):
– Grandfathering clauses are being phased out. The ₹50 lakh minimum investment becomes universal within 36 months, and prudential-limit compliance is due within 12 months. If your firm has been quietly coasting on a grandfathered client book, consider this the “you’ve been on the list a while, time’s up” notice.
– Portfolio managers are explicitly barred from operating outside India, except for genuine overseas-securities execution. SEBI has read the geography section of everyone’s business plan very carefully.
Still wrapped, contents unknown (the wildcards):
Demat account portability across portfolio managers, a relaxed Power of Attorney requirement, independent fund managers operating under one registered PM’s roof, and Eligible Fund Managers managing overseas clients in overseas securities. Any of these, if it makes it under the tree for real, changes onboarding and operations meaningfully – so it’s worth reading the fine print before you get too excited and shake the box.
There are 26 formal consultation questions in total. This is not a “skim it between meetings” paper – it’s a “block out an afternoon, make tea, and actually respond with rationale” paper, because SEBI is explicitly asking for one.
So: Merry Christmas, PMS industry. Santa’s read the letter. Now it’s your turn to write back – by August 13, 2026, please, before the sleigh leaves.
Views are a plain-language summary for discussion purposes and not a substitute for the full consultation paper or the draft regulations at Annexure A.
