Registration mandatory for all the PMS provider with APMI: SEBI

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The Securities and Exchange Board of India (SEBI) has made it mandatory for Portfolio Management Service (PMS) providers to register with the industry body – the Association of Portfolio Management Services Providers (APMS). The mandatory registration of PMS providers with APMI is a regulatory measure aimed at promoting investor protection, market integrity, and professionalism within the portfolio management services industry in India.

In a circular, SEBI stated that the new directive will be effective from January 1, 2025. APMI will issue the registration criteria for distributors by July 1 of this year.

“In order to facilitate collective oversight of PMS distributors at the industry level, it has been decided that any person or entity involved in the distribution of portfolio management services shall obtain registration with APMI,” SEBI said.

This practice mirrors the existing procedure in the mutual fund industry. Mutual fund distributors are mandated to register with the Association of Mutual Funds in India (AMFI) and secure an ARN (AMFI Registration Number) to offer distribution services. This ensures adherence to industry standards and regulatory requirements, promoting transparency and accountability in the mutual fund distribution process.

Individuals employed by a portfolio manager to serve as distributors of Portfolio Management Services (PMS) are mandated to acquire certification from the National Institute of Securities Markets (NISM). This requirement ensures that distributors possess the necessary knowledge and expertise in securities markets and related regulations. By obtaining certification from NISM, distributors demonstrate their competency and proficiency in effectively performing their roles, thereby enhancing investor confidence and promoting professionalism within the industry.

All the portfolio managers are responsible for ensuring that distributors adhere to the Code of Conduct specified under portfolio managers’ rules. This ensures ethical behavior, investor protection, regulatory compliance, and the maintenance of a positive reputation within the industry.

The requirement for compulsory registration with APMI followed a review of the existing regulatory framework by a working group appointed by SEBI under the Portfolio Managers Regulations. The group proposed initiatives to enhance the ease of conducting business, aiming to streamline and simplify compliance procedures.

In the past year, APMI launched a distributor registration portal that allows individuals to acquire an APMI Registration Number (APRN), enabling them to sell PMS. Participation in this registration process was optional for existing PMS distributors.

What is PMS and APMI? PMS is a specialized service offered by financial institutions to manage the investment portfolios of high-net-worth individuals (HNIs). Instead of investing in mutual funds where decisions are made for a pool of investors, PMS offers personalized investment strategies tailored to the individual’s financial goals and risk appetite. Now by being part of APMI, PMS providers become subject to industry oversight, which can help in monitoring their activities and ensuring fair practices, and APMI serves as a platform for collaboration, advocacy, and setting industry standards.