Sebi lays down new norms for portfolio managers’ audit

livemint.com:

capital market regulator in a circular said, “ In order to have uniformity, it has been decided that APMI, in consultation with SEBI, shall specify standardised Terms of Reference (‘ToR’) for aforesaid audit of firm-level performance data." “The standard Terms of Reference specified by APMI shall be applicable with effect from October 01, 2023, and shall be mandatorily followed by all Portfolio Managers for the purpose of annual audit of firm-level performance data," the Sebi circular added. The capital market regulator further said the standard ToR will include requirement for Portfolio Managers to consider clients’ portfolios under all services for the purpose of audit of firm-level performance data.

However, the performance of advisory clients may be excluded only if performance of such clients, either individually or cumulatively, is not reported or published in any marketing material or website, the Sebi circular added. The market regulator further said the portfolio managers are required to audit firm-level performance data on an annual basis and submit the confirmation of compliance with the requirement of the annual audit of firm-level performance data in line with the standard ToR within 60 days from the end of each financial year.

They are required to consider all clients’ portfolios managed --clients of both discretionary and non-discretionary portfolio management services--for the purpose of audit of firm-level performance data. The report on confirmation of compliance to the market regulator will be to be certified by directors or partners of the portfolio manager or by any person authorised by them.