Sebi tightens PMS disclosure norms

SEBI has asked portfolio managers to disclose the performance of portfolio management schemes (PMS) against benchmark indices in periodical reports to be furnished to their clients.

The objective is to give investors an objective analysis of the performance of the portfolios being managed by the portfolio managers on discretionary basis in comparison with the rise or fall in the markets. The portfolio managers may select any of the indices available — from BSE-30 share Sensex, S&P CNX Nifty, BSE 100, BSE 200 or S&P CNX 500 — depending on investment objective and client’s portfolio. Any change of the benchmark indices at a later date should be recorded and justified with specific reasons. The boards of the portfolio managers should review the compliance of regulations in their periodical meetings and develop a system of getting quarterly reports of compliance of Sebi regulations. Boards of the portfolio managers should also review redressal of investors’ grievances. Any deficiency letters or warning letters issued to the portfolio managers by Sebi should also be placed before the boards. Sebi has also recommended portfolio managers to undertake internal audit of their PMS by a practising chartered accountant or a company secretary to judge the quality of procedures being followed by the portfolio manager.