Sebi Clears New PMS Rules, Expands FPI Access to Commodity Derivatives

Markets regulator Sebi on Thursday approved a slew of reforms aimed at deepening market participation, widening investment avenues and simplifying compliance, including a revamped framework for portfolio managers and greater access for foreign portfolio investors (FPIs) to commodity derivatives.

The Sebi board approved the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, replacing the existing 2020 framework. Under the revised rules, portfolio managers will be permitted to invest in IPOs, primary-market debt issues and a broader range of overseas securities.

The regulator also allowed FPIs to participate in physically settled, non-agricultural commodity derivatives, subject to safeguards. They will have to exit their positions at least three days before expiry and before the start of the tender period.

In another significant decision, Sebi approved allowing REITs and publicly listed InvITs to issue Depository Receipts (DRs) in permissible overseas jurisdictions, potentially widening access to foreign capital.

The board also expanded the pool of accredited investors. Individuals with securities-market assets of Rs 5 crore and body corporates with such assets of Rs 20 crore will qualify, alongside existing income and net-worth criteria.

Under the revised PMS framework, managers can invest up to 10 per cent of a client's assets under management in investment-grade unlisted non-convertible debt securities, with client consent. They can also invest in overseas listed securities, REITs, mutual funds, ETFs, index funds and foreign government securities, subject to regulations.

Sebi introduced PRIM (Portfolio Managers' Route for Investing in Mutual Funds), enabling investment in direct mutual fund plans, including ETFs and index funds, with a minimum investment of Rs 25 lakh. The board also approved a revised settlement framework, including a fast-track route for settlements up to Rs 10 lakh, and a fourth Settlement Scheme, 2026, for specified illiquid stock-option cases.

Other decisions included easing compliance for research analysts, revising REIT/InvIT voting rules and strengthening regulations for vault managers, including raising their minimum net worth requirement from Rs 50 crore to Rs 75 crore.