On Feb. 15, IND SEBI proposed ease of doing business initiatives.
IND SEBI proposed promoting collective oversight of PMS distributors by making registration with the Association of Portfolio Managers in India (APMI) mandatory.
Also facilitating ease of digital onboarding process for portfolio managers' clients.
Proposals aimed at promoting ease of doing business initiatives for portfolio managers.
Follows IND SEBI Oct. 2023 simplification of numerous regulations, see #186918.
Mandatory APMI for PMS Distributors
Recommendation in line with practice followed in mutual fund industry, where mutual funds distributors are required to register with Association of Mutual Funds in India (AMFI) and obtain AMFI registration number (ARN) for providing distribution services.
Currently, persons engaged by a portfolio manager to act as a distributor of PMS are required to obtain certification from National Institute of Securities Markets (NISM).
Portfolio managers are required to ensure distributors abide by the code of conduct.
Benefits include registration with industry body; single filing for compliance and other declarations; access to industry data; easy and faster access to portfolio managers.
Also includes common know-your-distributor (KYD) requirements for easier registration with portfolio managers; training for NISM XXI-A examination at discounted fees; faster grievance redressal' updates on guidelines and circulars related to PMS.
Onboarding Process
While onboarding a client, portfolio manager should ensure the client has understood fee structure, and the words I/we have understood the fees/charge structure should be handwritten in cases where client is being boarded through physical mode.
Further, words should be hand-typed using a keyboard by the first holder in case the client is being boarded through a digital mode.
Other holders should click on yes/no to indicate they have understood fee structure.
IND SEBI highlighted there are certain operational challenges in complying with the requirement of a handwritten note on the annexure of fees in the agreements, including non-availability of stylus at the location of the investors.
The requirement creates a hindrance towards complete digital onboarding of clients.
Effectiveness
Comments from the public must be submitted by Mar. 7, 2024.
May 2024 Registration of PMS
On May 2, 2024, IND SEBI issued a circular stipulating that any person/entity involved in the distribution of portfolio management services shall obtain registration with APMI.
Portfolio managers shall ensure that any person or entity engaged in the distribution of its services has obtained registration with APMI, according to the required criteria.
The circular shall come into effect from Jan. 1, 2025.
APMI shall issue the criteria for registration of distributors by Jul. 1, 2024.
In Mar. 2024, IND MF wrote on provisional AMFI registration number, see #210914.
