Sebi asks PMS managers for client deal data

The Securities & Exchange Board of India (Sebi) has asked all portfolio management service (PMS) providers, who handle investments of the rich and ultra-rich, to submit information on the quantum of various securities bought by different kinds of clients.

The communique from the capital market regulator, which came a week ago, has sparked speculation among some of the portfolio managers about Sebi taking a closer look at the investment patterns through the PMS route. More so, with many high net worth individuals preferring to park a slice of their money under PMS and with alternative investment funds (AIFs) like private equity and venture capital outfits.

A portfolio manager does not accept anything below Rs. 50 lakh (or, securities worth that amount) from a client. The cut-off investment was raised from Rs. 25 lakh last year.

Attracted by higher commissions (compared to what mutual funds pay), many distributors of financial products have been hard-selling PMS products. “There has been a rise in the number of boutique PMS outfits, the PMS pie has grown, and the market has become volatile. Compared to mutual funds with so much retail money and the AIF industry, the PMS industry has light-touch regulations – even though disclosure and some of the rules were tightened a year ago. It’s possible that Sebi would like to know whether there were large exposures to some stocks,” said a senior official of a large mutual fund.