SEBI board approves new PMS rules, settlement framework and common ad code

The Securities and Exchange Board of India (SEBI) approved several reforms at its board meeting on 24 September 2026. The main changes are an overhaul of portfolio management services (PMS) and new rules for settling enforcement cases.

New Portfolio Managers Regulations, 2026

The SEBI (Portfolio Managers) Regulations, 2026 replace the 2020 rules. Key changes:

• PMS providers can invest client money in IPOs and primary debt issuances.
• Discretionary PMS can put up to 10% of client AUM in investment-grade, non-convertible, unlisted debt, with the client's consent.
• Exposure to exchange-traded derivatives is allowed up to 1.25 times client AUM.
• PMS can invest in foreign securities, subject to FEMA and the RBI's Liberalised Remittance Scheme.
• A new PRIM route lets portfolio managers invest in direct plans of mutual funds. It has a minimum ticket size of ₹25 lakh and management fees capped at 1% of AUM.
• Graduates can now serve as principal officer, and dealing-room requirements are relaxed for managers with AUM below ₹100 crore.

Settlement framework

The new Settlement of Administrative and Civil Proceedings Regulations, 2026 replace the 2018 rules:

• Settlement amounts will be calculated by a formula based on the minimum penalty for the violation, adjusted for factors such as how serious the violation was.
• Wrongful gains will be disgorged separately.
• SEBI can issue a settlement notice even before a show-cause notice. The time to apply after a show-cause notice increases from 60 to 90 days.
• A fast-track route will cover settlement amounts of up to ₹10 lakh for specified violations.

Other decisions

• A common advertisement code for brokers, advisers, research analysts, PMS and mutual funds. Celebrity endorsements are allowed for brand-level promotion, subject to safeguards.
• FPIs can trade in non-agricultural index derivatives and some commodity derivatives.
• Vault manager rules are extended to bullion underlying ETFs and bullion derivatives, and the net worth requirement rises from ₹50 crore to ₹75 crore.

What it means for investors

PMS investors (the minimum investment is ₹50 lakh) may get access to a wider range of products. Retail investors will see ads from market intermediaries under a single code. The changes take effect once SEBI notifies the regulations and circulars.