Background

The Securities and Exchange Board of India (“SEBI”) held its 215th board meeting in Mumbai on September 24, 2026 (“Board Meeting”). At the Board Meeting, the board of SEBI (“Board”) approved a wide-ranging set of regulatory reforms spanning portfolio managers, settlement proceedings, advertisements by regulated entities, research analysts, commodity derivatives, vault managers, REITs and InvITs, listing of debt securities, certification of market professionals, alternative investment funds and the accredited investor framework.

The decisions are broadly directed at four objectives: (i) ease of doing business and rationalisation of compliance requirements; (ii) widening of permissible investment avenues and deepening of market liquidity, including through greater foreign participation; (iii) making the settlement framework simpler, more predictable and less discretionary; and (iv) strengthening investor protection.

This update summarises SEBI Press Release No. 59/2026 dated September 24, 2026, and the release records the Board’s decisions to introduce or amend the relevant regulations and states that implementation details for certain measures will follow by circular. Set out below is a summary of the key decisions taken at the Board Meeting.

1. Comprehensive Review of the Portfolio Managers Regulations

The Board approved the introduction of the SEBI (Portfolio Managers) Regulations, 2026 (“PMS Regulations 2026”) in supersession of the SEBI (Portfolio Managers) Regulations, 2020. The key measures are set out below.

(i) Developmental Measures

(a) IPOs and primary debt issuances: Portfolio managers will be permitted to invest in IPOs and in primary market issuances in the debt market.

(b) Unlisted debt securities: Under Discretionary Portfolio Management Services (“DPMS”), up to 10% of a client’s Assets Under Management (“AUM”) may be invested in investment-grade, non-convertible, unlisted debt securities, subject to client consent.

(c) Exchange traded derivatives: Greater flexibility has been provided for investment in exchange traded derivatives, up to 1.25 times of the client’s AUM.

(d) Foreign securities: Investment in foreign securities will be enabled under both DPMS and Non-Discretionary Portfolio Management Services (“NDPMS”). Permissible instruments include listed equity, debt, REITs, overseas mutual funds, exchange traded funds (“ETFs”), index funds and foreign government debt, governed by the Foreign Exchange Management Act, 1999 (“FEMA”) and the Liberalised Remittance Scheme (“LRS”) of the RBI.

(e) Eligible Fund Managers: Eligible fund managers will be permitted to manage and advise on investments of eligible investment funds in overseas securities. Where an eligible investment fund invests in Indian securities, the investment limits will remain aligned with the prevailing foreign portfolio investment framework.

(ii) Portfolio Managers Route for Investing in Mutual Fund Units (“PRIM”)

PRIM is a new route enabling portfolio managers to invest client funds in direct plans of mutual funds, including ETFs, index funds and Specialized Investment Funds (“SIFs”), of Indian asset management companies (“AMCs”). An existing portfolio manager may offer PRIM through a separate investment approach with a minimum ticket size of INR 25 lakh. Alternatively, an applicant intending to operate strictly within the securities permissible under PRIM may obtain a new registration. Given the specific nature of the services, the following guidelines will apply to PRIM:

(a) Minimum ticket size: INR 25 lakh.

(b) Net worth: INR 2 crore.

(c) Qualification: Graduation/CFA/CA with two years of experience in securities market and a simplified NISM certification for principal officer.

(d) Exit load: Exit load provisions will be waived.

(e) Group AMC cap: A prudential cap of 25% will apply on investments in schemes of affiliated, group or associate AMCs.

(f) Fees: A fixed management fee capped at 1% of the client’s AUM; a performance-based fee model is also permitted.

(g) Segregation from distribution: Activities and clients of the mutual fund distribution business and PRIM must be segregated, except in respect of accredited investors.

(iii) Independent Fund Managers

The PMS Regulations 2026 introduce the concept of Independent Fund Managers (“IFMs”), who will manage and operate client portfolios in association with a registered portfolio manager. The following investor protection safeguards will apply:

(a) Responsibility of the portfolio manager: The registered portfolio manager will bear full responsibility and liability for all activities of the IFM.

(b) Qualifications: IFMs must possess the same qualifications, experience and certifications as a principal officer.

(c) Fees and order flow: Fees will be paid directly to the registered portfolio manager, and orders generated by IFMs must flow through the portfolio manager’s infrastructure.

(d) Affiliation: A portfolio manager may affiliate with several IFMs; however, an IFM may operate under only one portfolio manager at a time.

(e) Client exit: Clients must be given a mandatory exit option if an IFM leaves or is terminated.

(f) APMI database: The Association of Portfolio Managers in India (“APMI”) will maintain and update a central database of all active IFMs.

(iv) Ease of Compliance Measures

(a) Principal Officer qualifications: Educational qualifications have been relaxed, and graduates will now be eligible to function as principal officer.

(b) Dealing room: SEBI has relaxed dealing room requirements for portfolio managers managing less than INR 100 crore. SEBI states that 48% of portfolio managers registered as on the date of the release would be covered.

(c) Standardised IMA: A standardised Investment Management Agreement (“IMA”) will be introduced for ease of understanding by clients. The authority to operate the client’s demat and trading accounts will be embedded in the standard IMA, although the power of attorney requirement for bank accounts, as mandated by the RBI, will continue.

(d) Reporting and disclosures: Timelines for material and non-material reporting are to be harmonised, and transition to digital communication is being promoted through a digital disclosure document.

(e) Operating expenses: Statutory levies will be excluded from the existing operating expense cap of 0.5% per annum.

(f) Consolidation and simplification: Related provisions on registration and co-investments have been consolidated, and general obligations organised around benchmarking and valuations. Grandfather and transitory provisions have been removed or modified with defined expiry periods. SEBI states that the rewrite reduces the regulations from 70 to 33 pages and the number of provisos from 47 to 4.

2. New Settlement Regulations

The Board approved the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026 (“Settlement Regulations 2026”), which will replace the SEBI (Settlement Proceedings) Regulations, 2018 (“Settlement Regulations 2018”). The Settlement Regulations 2026 will come into force on the day succeeding the 30th day from the date of their notification.

(i) Settlement Terms and Computation of Settlement Amount

Settlement terms will comprise the settlement amount, disgorgement of wrongful gains (where applicable), and Remedial and Regulatory Terms (“RRT”) (earlier known as non-monetary terms), where applicable. The settlement amount will be computed using the following formula:

Settlement Amount = Base Amount × (S + R + G + A – M) + Legal Costs

The Base Amount is linked to the minimum penalty provided for the violation under securities laws, with multipliers based on the type of applicant. ‘S’ represents the stage of proceedings, ‘R’ the regulatory action factor, ‘G’ the gravity factor based on the nature of the default, ‘A’ the aggravating factors and ‘M’ the mitigating factors.

Wrongful gains, losses avoided and losses caused to investors will no longer be considered while determining the Base Amount. Where quantified, such amounts will be disgorged separately, thereby removing the double counting of such amounts.

(ii) Expanded Access to Settlement

(a) Pre-SCN settlement notice (Wells notice): Before issuing a show cause notice (“SCN”), SEBI will issue a settlement notice giving the noticee 60 days to file a settlement application. No such notice will be issued where initiation of prosecution or passing of an interim order is contemplated.

(b) Longer filing window: The period for filing a settlement application after service of an SCN has been increased from 60 days to 90 days.

(c) Fast-track settlement: A fast-track route has been introduced based on (i) a monetary threshold, where the settlement amount does not exceed INR 10 lakh, in which case the matter will proceed from the internal committee directly to the panel of whole time members; and (ii) the nature of the violation (such as disclosure violations), in which case SEBI will issue a notice calling upon the entity against which enforcement proceedings are proposed to settle by paying the amount stated in the notice, and the settlement order will be passed by the panel of members upon payment.

(d) One-time window: A one-time window of 90 days from the commencement of the Settlement Regulations 2026 will be available to entities that did not apply earlier, or whose applications were rejected, withdrawn or returned under the Settlement Regulations 2018. This is limited to specified proceedings still pending before SEBI and will attract an additional 20% settlement amount.

(e) Settlement at appellate stage: Applications that were earlier rejected may be considered at the appellate stage, provided the grounds for rejection no longer apply, subject to an additional 20% settlement amount.

(iii) Settlement of Adjudication and Other Specified Proceedings

(a) Adjudication proceedings: RRT will ordinarily not be imposed while settling adjudication proceedings, as such proceedings only contemplate monetary penalties. However, where wrongful gains, losses avoided or losses caused to investors are quantified in the SEBI report, SCN or order, such amounts must be disgorged, and appropriate disclosures may be required for disclosure-related violations.

(b) Misrepresentation of financial statements and diversion of funds: Cases involving misrepresentation of financial statements or diversion or siphoning of funds may be settled, subject to appropriate RRT, including disclosures and bringing back of diverted funds.

(iv) Interest on Disgorgement

For proceedings pending before SEBI, interest on the disgorgement amount will be charged at 9% per annum from the date of violation until the date of filing of the settlement application. For other matters, interest will be charged at 9% per annum from the date of violation until the date of the final order, and at 12% per annum thereafter until the filing of the settlement application. No interest will be charged on interest.

The Settlement Regulations 2026 are expected to make the settlement framework simpler, less discretionary and more predictable, and to fast-track less serious matters, while ensuring that settlement continues to serve as an effective resolution mechanism with an appropriate deterrent.

3. Relaxation of Call Recording Requirements for Research Analysts

The Board approved a proposal to amend the SEBI (Research Analyst) Regulations, 2014 to relax the requirement for research analysts and research entities to maintain call recordings of communications with clients that are institutional investors.

4. Common Advertisement Code for Regulated Entities

As part of its ease of doing business initiative, the Board approved a Common Advertisement Code (“CAC”) applicable to stock brokers, depository participants, investment advisers, research analysts, online bond platform providers, portfolio managers and mutual funds/AMCs. The CAC will replace the existing entity-specific advertisement frameworks prescribed under the respective SEBI regulations and master circulars, and through circulars issued by recognised stock exchanges and supervisory bodies. Key features of the CAC include:

(i) Celebrity endorsements: Regulated entities will be permitted to use celebrities for brand-level or entity-level promotion, subject to prior approval and safeguards.
(ii) No prior approval: The requirement of mandatory prior approval of advertisements has been done away with (except for advertisements containing celebrity endorsements). However, post-issuance reporting will be required within three working days.

(iii) Ratings and rankings: Regulated entities will be permitted to advertise ratings and rankings assigned by the Past Risk and Return Verification Agency.

(iv) Non-promotional communications: An illustrative list of routine, factual and investor-service communications that will not be considered advertisements will be provided.

5. FPI Participation in Exchange Traded Commodity Derivatives

With the objective of deepening liquidity in the commodity derivatives market, foreign portfolio investors (“FPIs”) will be permitted to participate in (i) non-agricultural index derivatives contracts, irrespective of whether the underlying is cash-settled; and (ii) non-cash settled non-agricultural commodity derivatives contracts. FPI participation in non-cash settled contracts is contingent on FPIs exiting such contracts before any delivery obligation arises.

Under the proposed safeguard, FPIs must exit positions in non-cash settled contracts before the tender period, which begins three days before contract expiry (T-3), and may not increase their positions from T-3.

Before an FPI is enabled to trade, it must enter into an agreement with its trading member or trading-cum-clearing member (“TM/TCM”) specifying how positions will be handled. This includes squaring off positions or devolving residual open positions on the TM/TCM before the tender period at the exchange-declared closing or daily settlement price on the day of devolvement. Such devolvement will be treated as a trade attracting applicable statutory levies.

6. Amendments to the Vault Managers Regulations

The Board approved amendments to the SEBI (Vault Managers) Regulations, 2021 (“Vault Managers Regulations”), which presently govern vaulting services in respect of gold underlying Electronic Gold Receipts (“EGRs”). In view of the growth of bullion related instruments such as gold and silver ETFs and derivatives on bullion, the amendments establish a common and harmonised framework for vaulting services across all SEBI specified bullion related instruments. Key amendments include:

(i) Expanded scope: The Vault Managers Regulations will extend beyond EGRs to cover bullion underlying SEBI specified bullion related instruments, including ETFs and derivatives on bullion. Definitions of “bullion” and “bullion related instruments” will be inserted, and the EGR-specific chapter will be replaced with a product-neutral chapter.

(ii) Bullion Delivery Standards: The EGR-specific term “Gold Standards” will be replaced with “Bullion Delivery Standards”, applicable to bullion underlying all SEBI specified bullion related instruments.

(iii) Net worth: The net worth requirement for vault managers will be enhanced from INR 50 crore to INR 75 crore.

(iv) Security policy: Requirements will be strengthened to address risks including theft, burglary, fire, fraud, terrorism and cyberattacks; the risks covered under the security policy and the procedure for dealing with losses will be aligned.

(v) Segregation: Business-wise segregation of activities will extend to vaulting services for all SEBI specified bullion related instruments, and new provisions will be inserted for instrument-wise and entity-wise segregation of bullion stored by vault managers.

(vi) Compliance Officer: Vault managers will be required to appoint a Compliance Officer, and the regulations will specify the broad duties of the Compliance Officer.

SEBI will issue a consequential circular to operationalise the amended framework, covering storage and safekeeping, quality standards, reconciliation, inspection, audit, insurance, security and infrastructure, risk management and grievance redressal.

7. REITs and InvITs

(i) Issuance of Depository Receipts on Units: The Board approved amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”) and the SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) to provide an enabling provision for the issuance of Depository Receipts (“DRs”) on units of REITs and InvITs, with a view to attracting foreign capital. The framework envisages the issuance and listing of DRs in the International Financial Services Centre in India to begin with; all foreign investors (including NRIs) may invest in such DRs. The detailed framework will be specified by circular after the amendments are notified.

(ii) Ease of Doing Business Measures: The Board also approved the following amendments to the REIT Regulations and InvIT Regulations:

(a) Unitholder approval threshold: Matters that currently require approval by 75% of all outstanding units will instead require approval by 75% of the total votes cast, in alignment with the approach under the Companies Act, 2013.

(b) Exit offer on exit of one sponsor: Where one of multiple sponsors exits and the other sponsors continue, the exit offer may be provided either by the outgoing sponsor or its group entities, or by the continuing sponsor or its group entities.

(c) Dissenting unitholders: “Dissenting unitholders” will now mean only unitholders who have voted against the resolution, rather than all unitholders who have not voted in favour. The notice to unitholders must contain an explicit disclaimer that any exit option will be offered only to unitholders voting against the resolution.

(d) Minimum public unitholding: All units tendered in an exit offer must be accepted, rather than on a proportionate basis. Where minimum public unitholding falls below the prescribed threshold as a result, compliance must be achieved within one year from completion of the exit offer.

(e) Remote common infrastructure: For REITs, the definition of real estate/property will be amended to include remote common infrastructure, which did not previously qualify since the definition referred only to common infrastructure for composite real estate projects.

8. Listing of Outstanding Unlisted Debt Securities: Regulation 62A of the LODR Regulations

The Board approved an amendment to Regulation 62A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) to do away with the requirement for mandatory listing of all outstanding unlisted non-convertible debt securities (“NCDs”) by an issuer proposing to list its NCDs for the first time. Currently, such an issuer is required to list all its outstanding unlisted NCDs issued on or after January 1, 2024 within three months from the date of listing of the proposed NCDs.

Going forward, an entity will be required to list only prospective issuances of NCDs. SEBI noted that the mandatory listing of already subscribed issues added operational challenges and cost, while the information disclosed is common across series. The amendment is expected to encourage listing of debt securities by new issuers.

9. Certification of Specified Persons in the Securities Markets

The Board approved amendments to the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007: (i) the cut-off for the age- and experience-based exemption will shift from the date of notification to the date of appearing in the examination or obtaining Continuing Professional Education; (ii) completion of specified courses or programmes will count as certification; and (iii) the regulations will be renamed the SEBI (Certification of Specified Persons in the Securities Markets) Regulations, 2007.

10. Alternative Investment Funds: Extension of Investor Protection

The Board approved amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 to extend to investors of all forms of alternative investment funds (“AIFs”) a protection presently available only to investors of AIFs set up as trusts. Under this protection, the fund manager or its officers cannot use the AIF’s assets to pay for their own losses, damages or expenses, including costs of resolving investor disputes. The protection will now apply irrespective of the form in which the AIF is set up.

11. Review of the Accredited Investor Framework

The Board approved amendments to the accredited investor (“AccI”) framework with the objective of simplifying the accreditation process and expanding the pool of eligible investors. The key changes are:

(i) Manager-led accreditation: As an additional and optional route, managers of AIFs, AMCs offering SIFs and SEBI-registered portfolio managers will be permitted to accredit investors. The existing route through accreditation agencies will continue.

(ii) Securities market exposure criterion: Investors may qualify for accreditation based on securities market exposure of at least INR 5 crore for individuals, HUFs, family trusts and sole proprietorships, and INR 20 crore for body corporates and other trusts, providing a digitally verifiable additional eligibility criterion.

(iii) Deemed accreditation for non-residents: Persons resident outside India, as defined under FEMA, including FPIs, will be deemed to be AccIs.

(iv) Limited liability partnerships: LLPs will be eligible for accreditation where each partner is an AccI, in line with the existing framework for partnership firms.

Accreditation under both the manager-led and accreditation agency routes will be valid for three years. Manager-led accreditation will be portable across AIF, SIF and PMS products within the same group, subject to appropriate safeguards.

12. Settlement Scheme, 2026 for Illiquid Stock Options

SEBI has decided to introduce a fourth settlement scheme (“ISO Scheme”) under Section 15JB of the SEBI Act, 1992 read with Regulation 26 of the Settlement Regulations 2018 for trading activities in illiquid stock options on BSE. Earlier schemes were introduced in 2020, 2022 and 2024.
The ISO Scheme was approved by SEBI’s Competent Authority following recommendations of the High Power Advisory Committee and was placed before the Board for information.

The scheme covers eligible entities whose non-genuine BSE stock options trades between April 1, 2014 and September 30, 2015 remain the subject of enforcement proceedings before an Adjudicating Officer, the Securities Appellate Tribunal, a court or a Recovery Officer. The settlement amounts are as follows:

The modalities for making an application under the ISO Scheme will be informed in due course.

Credits: Rohan Chatterjee (Associate)