SEBI Approves Overhaul of PMS Rules, Opens Commodity Derivatives to FPIs

NEW DELHI — The Securities and Exchange Board of India (SEBI) on Saturday announced that its board approved a package of reforms to portfolio‑management services (PMS) and foreign‑portfolio‑investor (FPI) access to commodity derivatives. The decisions, taken at a meeting on 24 September 2026, expand the range of securities that PMS providers can hold for clients and permit FPIs to trade in non‑agricultural commodity futures.

Revised PMS framework

Under the new guidelines, portfolio managers may now include a broader set of asset classes, such as exchange‑traded funds (ETFs), listed infrastructure bonds and select alternative‑investment‑fund (AIF) schemes, in client portfolios. The changes replace the 2020 PMS framework, which limited managers to equities, debt and a narrow set of derivatives. SEBI said the revision is intended to deepen market participation, improve liquidity and bring Indian PMS practices in line with global standards.

The board also introduced a tiered structure for PMS offerings. The “enhanced” tier, aimed at high‑net‑worth individuals, will require a minimum investment of ₹5 crore and allow managers to employ leverage up to 2.5 times the client’s capital, subject to risk‑management safeguards. The “standard” tier retains the existing ₹1 crore minimum but adds the newly permitted asset classes.

FPIs gain entry to non‑agricultural commodity futures

Previously, FPIs were restricted to agricultural commodity derivatives under SEBI’s rules. The new reforms lift that barrier, allowing foreign investors to trade futures on metals, energy and other non‑agricultural commodities on recognised exchanges. SEBI’s notice specifies that FPIs must comply with the same position‑limit and margin‑maintenance requirements that apply to domestic participants.

The move is expected to broaden the investor base in India’s commodity‑derivatives market, which posted a turnover of ₹3.2 trillion in the 2025‑26 fiscal year, according to SEBI’s market‑statistics bulletin.

Advertising norms relaxed

In addition to the PMS and FPI changes, the board approved a relaxation of advertising regulations for PMS providers. Firms may now use digital platforms, including social‑media channels, to promote their services, provided they disclose risk warnings and obtain prior approval from SEBI’s compliance department. The amendment replaces the earlier rule that limited advertising to print media and required a pre‑approval certificate for each campaign.

Implementation timeline

SEBI has set a 60‑day window for PMS entities to align their operating agreements with the new framework. Existing PMS contracts will be deemed compliant if they are amended by 30 November 2026. FPIs wishing to trade non‑agricultural commodity futures must submit revised registration forms to SEBI’s market‑intermediaries division by 15 December 2026.

Industry reaction

Industry bodies welcomed the reforms. The Association of Mutual Funds in India (AMFI) noted that the expanded asset‑class list will enable portfolio managers to construct more diversified strategies for retail and institutional clients. The Federation of Indian Export Organisations (FIEO), representing many foreign investors, said the inclusion of FPIs in commodity derivatives removes a long‑standing market distortion and could attract additional foreign capital.

SEBI’s chairperson, Ms. Madhabi Puri Buch, reiterated that the board’s decisions are part of a broader agenda to modernise India’s capital‑market infrastructure. She emphasized that all participants must adhere to the board’s risk‑management guidelines and that SEBI will monitor market impact through quarterly reviews.