Market Brief: Strategic Overhaul of India’s Portfolio Management Services The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of the regulatory framework governing Portfolio Management Services (PMS). Chairman Tuhin Kanta Pandey announced on February 23, 2026, that a formal consultation paper will be released by **June 2026**. This move targets a sector that has seen explosive growth. Excluding retirement funds, the PMS industry’s assets under management (AUM) surged from **₹5 lakh crore** in FY21 to nearly **₹10.50 lakh crore** as of January 31, 2026. This represents a compound annual growth rate (CAGR) of approximately **17%**. Strengthening Governance and Suitability The upcoming overhaul seeks to modernize the 2020 Portfolio Manager Regulations. SEBI's primary focus is shifting from simple rule-following to a culture of institutional discipline. Key pillars of the new framework include: * **Investor Suitability:** Ensuring high-stakes, concentrated portfolios are strictly aligned with an investor's risk profile rather than sold as generic products. * **Operational Scale:** As the number of registered portfolio managers grows to **501** (up from **361** in recent years), SEBI is mandating stronger internal controls and clear segregation across business units. * **Distribution Conduct:** New rules will target "mis-selling" by distributors to protect the current base of **2.15 lakh** clients, a number that has grown **50%** since 2022. Capital Market Funding and RBI Coordination SEBI is currently examining critical industry representations regarding the Reserve Bank of India’s (RBI) new capital market funding framework. The RBI's revised directions, effective **April 1, 2026**, mandate that bank credit to market intermediaries must be fully collateralized. Brokers have raised concerns over the proposed **100%** bank-guarantee collateral requirement for proprietary traders, up from the previous **50%**. While the RBI maintains these rules are necessary to prevent bank credit from fueling speculative proprietary trading, SEBI is reviewing the impact on market liquidity and intermediary costs. New Oversight for "To-Be-Listed" Securities In a significant expansion of its jurisdiction, SEBI is developing a mechanism to provide oversight for stocks in the "to-be-listed" phase. This initiative is designed to curb unregulated "grey market" activities that occur between the filing of an IPO and the actual listing. By leveraging exchange mechanisms, the regulator aims to bring transparency to this speculative window, ensuring that price discovery remains fair and retail investors are protected from off-market manipulation. Industry Trajectory The reforms arrive as India's managed funds industry—including PMS, Mutual Funds, and AIFs—is projected to grow **2.1x** to reach **₹455 lakh crore** by 2030. SEBI’s current efforts signal a shift toward a technology-driven, risk-based compliance regime intended to support this massive financialization of household savings.