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The Securities Exchange Board of India (SEBI) introduced the master circular no. SEBI/HO/IMD/IMD-POD-1/P/CIR/2023/38 for the portfolio managers on 20th March 2023. The circular came into force from the date of issue. The master circular aims to effectively regulate Portfolio Managers. It prescribes certain reporting requirements that the portfolio managers have to follow. Their reporting is done under three heads. Let’s discuss the reporting requirements in detail to get a brief idea of the reporting requirements of the Portfolio Managers:
Table of Contents
Every Registered Portfolio Manager (RPM) is required to submit a monthly report giving details about all the portfolio management activity. SEBI also prescribes a format under Annexure 5A accordingly the reports should be filed. There is no requirement to send the hard copy of the report to SEBI. A scanned copy of the report should be uploaded by the RPM within 7 (seven) days from the end of the month. Data relating to Assets under Management (AUM) of the portfolio manager on the last day of the calendar year should be indicated in Rupees. A compliance officer appointed in terms of the SEBI (Portfolio Managers) Regulation, 2020 shall be responsible to ensure compliance with the circular. A detailed process has been prescribed for uploading monthly reports on the portal. The process is as follows:
By way of circular no. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated 13th February 2020 SEBI has mandated the submission of certain documents. The circular became effective from the financial year 2019-20 and requires the submission of the following documents:
2. Corporate Governance Report
3. Firm-level performance reporting
Firm-level auditing and performance reporting is to be done annually and should be reported within 60 (sixty) days from the end of a financial year. This report should be certified by the Directors/Partners of the Portfolio Manager or by any person(s) authorized by the Board of Directors/partners of the Portfolio Manager.
4. Offsite Inspection and Data Reporting
To do offsite inspection and surveillance of Portfolio Managers and to monitor the compliance level, SEBI framed data structure and all Portfolio managers are required to furnish data to SEBI under the heads prescribed. This report has to be filed within 10 (ten) days from the end of the quarter. Day-wise data is required to be furnished under the following headings: “Client Folio AUM”, “PM Pool Demat Account Holding” and “Client Holding Master”. In case of first-time reporting, the data of all their clients from 1st April 2020 to 30th September 2020 shall be submitted by the Portfolio Managers. The data that is required to be submitted by the Portfolio Manager as per the reporting formats is given under Annexure 5B and the details of the requirements under different clauses of the Master Circular are done as per the reporting format prescribed under Annexure 5C.
A report prepared as per the format prescribed under Annexure 5D of the Master Circular shall be furnished to the clients quarterly. This report shall include the following:
If any portfolio manager fails to submit the report within the due date as provided under the circular or refuses to file the report, then it shall constitute a default. The Portfolio Manager shall be liable for such action under SEBI (Intermediaries) Regulation, 2008.
At last, it can be said that the SEBI Portfolio managers have to submit a monthly report to the Association of Portfolio Managers in India, who in turn makes these reports available on the website in a simple manner. This is done to facilitate ease of comparison and to provide access to the portfolio level, investment approach level and portfolio manager level and industry level information to all stakeholders. It is the responsibility of the Association of Portfolio Managers to make available the relative performance of all investment approaches and to disclose the same on the website. This move of SEBI is highly appreciated as it creates distinct categories for reporting and ensures transparency. It makes sure that the true performance of the strategy is reflected in the report.
Read our Article: SEBI issues Circular on Portfolio Managers Compliance
Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.
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