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Regulator wants more powers for portfolio management clients


Kolkata: After asking portfolio management services companies to keep separate accounts for each client’s assets, India’s market regulator now wants to empower the clients to verify their assets in such firms.

“We have asked the portfolio managers to segregate a client’s assets not only from their own assets, but also from other clients’ assets. Assets must be kept client-wise,” Securities and Exchange Board of India (SEBI) chief C.B. Bhave said at an interactive session here Thursday.

Taking a step further, SEBI now wants the clients to be able to verify the assets in the firm independent of their portfolio. “This will ensure that it is not possible for portfolio managers to create a mirage,” Bhave said.

The SEBI chief said this could be done through depository participants, who can verify the assets on behalf of a client.

“If the assets of each client is kept in separate depository accounts, then it’s possible for us to ask the investors to get a confirmation from the depository participants about their accounts. He can get a confirmation independent of the portfolio managers,” he said.

Bhave said the Reserve Bank of India (RBI) has agreed to keep funds of corporate bonds in their account between pay-in and pay-out.

“We want the clearing corporations to come in between pay-in and pay-out of corporate bonds. And we want the funds to be in RBI accounts. RBI has agreed to this,” he said.

The move will lead to greater transparency and encourage development of the bond market.

The system is likely to be implemented in the next couple of months. Bhave said SEBI was also working on a delisting guideline and expected them to come up in a couple of months.