On May 2, IND SEBI issued measures on ease of doing business.
IND SEBI issued circular for Portfolio managers - facilitating ease in digital on-boarding process for clients and enhancing transparency through disclosures.
Follows IND SEBI Mar. 2023 master circular for portfolio managers, see #166824.
Disclosures
Working group reviewed current regulatory framework in SEBI (portfolio managers) regulations, 2020; recommended measures to promote ease of doing business.
IND SEBI mandates portfolio managers to ensure clients fully understand fee structures before onboarding, including modifications to agreement process.
By allowing for digital signatures, typed confirmations, ensuring clarity, transparency.
Portfolio managers must provide a fee calculation tool to all clients highlighting various fee options with multi-year fee calculations and adherence to high watermark principle.
Additional fee disclosures introduced; performance fees must be accompanied by detailed illustrations of various scenarios, ensuring clients have clear understanding.
Furthermore, periodic reports must include an annexure detailing fee calculations.
Terms & Conditions
IND SEBI also introduced the most important terms and conditions (MITC) document to simplify critical aspects of the portfolio manager-client relationship.
The MITC document must be acknowledged by the client; portfolio manager must ensure compliance with for new clients on-boarded on or after Oct. 1, 2024.
For existing clients, the MITC shall be informed to the clients via email or any other suitable mode of communication (which can be preserved) by Jan. 1, 2025.
