SEBI (Portfolio Managers) (Amendment) Regulations 2021: A Guide

The SEBI (Securities and Exchange Board of India), by way of the powers provided under the provisions of section 30 subsection (1), read with section 11 subsection (2) clause (b) and section 12 subsection (1) of the SEBI Act 1992, has passed a Notification No SEBI/LAD-NRO/GN/2021/10on 16.03.2021, concerning the SEBI (Portfolio Managers) (Amendment) Regulations 2021.

Further, these amended rules aim to further amend or modify the provisions of the SEBI (Portfolio Managers) Regulations 2020 and will come into force from the publication date.

In this learning blog, we will deal with the concept of Portfolio Managers, together with the key changes bought through the SEBI (Portfolio Managers) (Amendment) Regulations 2021.

Concept of Portfolio Managers

The term Portfolio Manager means a person or an entity that formulates and implements different investment strategies and plans for individuals or institutional investors. Further, it shall be noted that Portfolio Managers are also known as the Investment Managers, Asset Managers, Wealth Managers, or Financial Advisors.

Also, one of the key and the primary responsibilities of a Portfolio Manager include to create and manage the client investment allocations.

The key objectives of Portfolio Management are as follows:

• Capital Appreciation;
• Maximising Returns on Investment (ROI);
• To Improve the overall proficiency rate of the Portfolio;
• Risk optimisation;
• Allocation of Resources Optimally;
• Ensuring flexibility of Portfolio;
• Protecting Earnings against the Market Risks;

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Key Provisions of the SEBI (Portfolio Managers) (Amendment) Regulations 2021

The key provisions or the changes bought by way of the SEBI (Portfolio Managers) (Amendment) Regulations 2021 are as follows:

Amendments in Regulation 7 (2) (d)

The amendments made in the provisions of the Regulation 7 sub-regulation (2) clause (d) can be summarised as:

Substitution of Sub-Clause (i)

(i) a professional qualification in the area of finance, accountancy, law, or business management from any university or a college acknowledged by the Central Government or by any of the State Government or by any foreign university, or a professional education by completing a Post Graduate Program in the field of Securities Markets (Portfolio Management) from the NISM of a tenure not less than one year, or a professional qualification by obtaining a CFA (Chartered Financial Analyst) charter from the CFA Institute.

Substitution of Sub-Clause (iii)

In the said sub-clause the symbol “.” has been substituted with the symbol “:”.

Substitution of First and Second Proviso

In the above mentioned provisos the symbol “.” has been substituted with the symbol “:”.

Insertion of Proviso after Second Proviso

After the second proviso a new proviso as follows has been inserted:

Provided further, that a fresh NISM certificate shall be obtained prior to the expiry of the validity of the prevailing certification to ensure continuity in the compliance with the certification requirements.

Substitution in the First Proviso of Regulation 7 (2) (e)

In the first proviso of the Regulation 7 (2) (e), the words ‘minimum qualifications and experience’ has now been substituted with the words and symbols ‘minimum qualifications, experience, and certification’.

Conclusion

In a nutshell, the Securities and Exchange Board of India has passed the SEBI (Portfolio Managers) (Amendments) Regulations 2021 to increase the ambit of the qualification criteria to become a Portfolio Manager in India and to insert the relevant provisos for the same.

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Official SEBI Notification