SEBI Overhauls Portfolio Management and Settlement Regulations

The Securities and Exchange Board of India approved a series of regulatory updates on September 24, 2026, aimed at simplifying market operations and expanding investor access. A primary focus was the overhaul of Portfolio Management Services (PMS) regulations, which reduced the rulebook from 70 to 33 pages. These reforms allow portfolio managers to invest in initial public offerings, foreign securities, and primary-market debt issuances. Discretionary PMS clients can now allocate up to 10% of assets under management to investment-grade, unlisted debt securities with consent.

Beyond PMS, the regulator revamped the accredited investors framework to include family trusts, sole proprietorships, and Hindu Undivided Families. This change is expected to increase the pool of sophisticated investors eligible for alternative investment funds from 1 lakh to 4 lakh. SEBI also established a Common Advertisement Code for market intermediaries, which permits celebrity brand promotion but prohibits the endorsement of specific financial products.

Additionally, the board approved a new settlement framework replacing the 2018 rules. The updated system expands the types of violations eligible for settlement, introduces a fast-track mechanism for cases under ₹10 lakh, and extends application deadlines from 60 to 90 days. While the new rules reduce regulatory discretion, SEBI Whole-Time Member Kamlesh Varshney clarified that the high-powered committee still maintains the authority to reject settlement applications.