SEBI has proposed replacing the 2020 Portfolio Managers Regulations with a comprehensive 2026 framework introducing PRIM, easing derivatives use, and enhancing client safeguards.
SEBI Proposes Replacement of Portfolio Managers Rules
On 15 October 2026, SEBI proposed the new Portfolio Managers Regulations, 2026, aimed at replacing the existing 2020 framework. The move is part of a broader regulatory modernization drive to align with evolving investment strategies and risk profiles in wealth management.
The proposed regulations introduce the concept of 'Permitted Investment and Risk Management (PRIM)' framework, allowing greater flexibility in asset allocation and derivatives usage while maintaining risk controls. Enhanced compliance requirements include robust portfolio monitoring, real-time reporting, and stricter conflict-of-interest management. Client onboarding norms are tightened with mandatory suitability assessments and risk profiling.
New provisions require portfolio managers to maintain higher net worth thresholds and strengthen cybersecurity protocols. There is also a greater emphasis on disclosures related to fees, performance benchmarks, and use of leverage. SEBI has also proposed simplified registration for small managers with assets under management below ₹100 crore.
For practitioners, the new framework implies significant advisory responsibilities in ensuring compliance with dynamic investment mandates and risk disclosures. The reforms are likely to increase operational costs for smaller managers but improve investor confidence and regulatory clarity in the high-growth portfolio management space.
Citations
- SEBI (Portfolio Managers) Regulations, 1993 (Proposed Replacement, 2026)
