SEBI Considers Mandatory Registration with APMI for PMS Distributors

The market regulator SEBI is considering mandatory registration with the Association of Portfolio Managers in India (APMI) for PMS distributors and also plans to simplify the digital onboarding process for portfolio managers’ clients. This proposal aims to streamline the doing of business for portfolio managers.

This proposal has been announced in the budget for the financial year 2023-24, following recommendations by financial sector participants to simplify compliance costs and reduce them after the announcement of the budget by the Finance Minister.

The consultation paper proposes mandatory registration with the Association of Portfolio Managers in India (APMI) for portfolio manager service distributors. This alignment closely resembles the practice in the mutual fund industry, where mutual fund distributors are required to register with AMFI (Association of Mutual Funds in India) and obtain an ARN (AMFI Registration Number) to conduct distribution services.

Currently, portfolio management service (PMS) distributors must obtain certification from the National Institute of Securities Markets (NISM) to work as distributors. Furthermore, portfolio managers must ensure that distributors adhere to the specified code of conduct under the portfolio managers’ regulations.

This proposal aims to bring consistency and regulatory oversight to the distribution of portfolio management services, similar to the practices observed in the mutual fund industry.

SEBI has indicated that mandating registration with APMI for PMS distributors will assist them in ensuring compliance, providing access to industry data, facilitating easy access for portfolio managers, and aiding in expedited grievance resolution.

This move is expected to streamline the regulatory process for PMS distributors and enhance transparency and efficiency in the portfolio management services industry.