Security and Exchange Board of India (SEBI) — the domestic securities market regulator—on Thursday approved a slew of reforms, including easing portfolio management rules, giving foreign portfolio investors (FPIs) greater access to commodity derivatives, allowing depository receipts against REIT and InvIT units and expanding the investment framework for portfolio managers (PMs). The moves are said to deepen market participation, widen investment avenues and further simplify regulatory norms.
Let’s understand what will change for portfolio managers, FPIs, and retail investors after the market regulator's regulatory overhaul.
What Will Change For Portfolio Managers
The market regulator allowed portfolio managers to invest in initial public offerings (IPOs), primary market debt issuances, and a wider range of overseas securities as it approved the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, which will replace the existing 2020 framework.
Additionally, PMs will now have exposure to other investment means, including overseas listed equity and debt, REITs, overseas mutual funds, exchange-traded funds, index funds and foreign government securities. However, it will be subject to applicable regulations.
SEBI has introduced an investment avenue with a minimum investment limit of Rs 25 lakh for portfolio managers in direct plans of Indian mutual fund schemes, including ETFs, index funds and special investment funds.
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Investment in REITs and InvITs
SEBI approved a proposal enabling Real Estate Investment Trusts (REITs) and publicly listed Infrastructure Investment Trusts (InvITs) to issue Depository Receipts (DRs) in permissible overseas jurisdictions. With this, the Trusts should aim to attract foreign capital into these investment vehicles.
The regulator revised voting requirements for certain matters for REIT and InvIT regulations. Now, voting requirements for certain matters will require 75 per cent of votes cast instead of 75 per cent of all outstanding units.
Changes For FPIs
FPIs are permitted to participate in physically settled, non-agricultural commodity derivative contracts before the commencement of the tender period, but are subject to the protection of exiting the position at least three days before expiry.
What Will Change For Vault Managers
Under the new framework, the market regulator raised the minimum net worth requirement for vault managers to Rs 75 crore from Rs 50 crore. It also strengthened requirements relating to storage, security, insurance, governance and risk management.
Other Changes
SEBI approved a common advertisement code for specified market intermediaries, allowing celebrity endorsements for brand/entity-level promotion while prohibiting specific product endorsements.
Introduced Independent Fund Managers to operate client portfolios alongside registered portfolio managers, who retain ultimate responsibility and liability.
Relaxed educational qualification requirements for principal officers and exempted portfolio managers with AUM under Rs 100 crore from dealing-room requirements.
Streamlined PMS framework regulations, reducing page count by 53 per cent (from 70 to 33 pages) and word count by around 42 per cent.
Approved a revised formula for calculating settlement amounts and established a fast-track route for cases up to Rs 10 lakh.
Amended exit offer rules in case of sponsor changes and clarified treatment for dissenting unitholders.
Eased compliance for research analysts and entities by relaxing communication recording requirements for institutional clients.
Expanded vault manager coverage to include bullion underlying gold or silver ETFs and bullion derivatives.