SEBI's September Reset: New Portfolio Manager and Settlement Regulations for 2026
SEBI replaced its 2020 Portfolio Managers framework, opening the door to IPO and unlisted-debt investments — while separately proposing an overhaul of how it settles enforcement cases.
At its September 24, 2026 board meeting, India's securities regulator quietly rewrote two rulebooks that matter far beyond the compliance departments that track them: how portfolio managers can invest client money, and how SEBI itself settles enforcement cases.
The Portfolio Managers overhaul
The SEBI (Portfolio Managers) Regulations, 2026 replace the 2020 framework outright, with three changes that matter:
- IPO and primary debt access. PMS clients can now be invested in IPOs and primary debt issuances — previously off-limits under the old framework.
- Unlisted debt exposure. Discretionary clients can hold up to 10% of assets under management in unlisted, investment-grade debt, with client consent.
- More derivatives headroom. Derivatives exposure is now permitted up to 1.25x AUM, widening the hedging and leverage toolkit available to portfolio managers.
Together, these loosen a regime that had kept PMS mandates relatively conservative — a meaningful shift for wealth managers and the family offices and HNI clients who use portfolio management services as an alternative to mutual funds.
The other half: how SEBI settles cases
On the same track, SEBI issued a consultation paper on the draft Securities and Exchange Board of India (Settlement of Proceedings) Regulations, 2026 — proposing to overhaul how the regulator resolves enforcement actions through settlement rather than full adjudication. This is the mechanism that determines how quickly, and on what terms, a company or individual under SEBI investigation can resolve the matter without a prolonged contested proceeding.
Why both changes landed together
It's not a coincidence that a liberalising investment-mandate change and an enforcement-settlement overhaul arrived in the same month. Read together, they reflect a regulator simultaneously giving portfolio managers more room to operate and rebuilding the mechanism it uses to police that room when things go wrong — loosening the front end while modernising the back end.
What it means in practice
For wealth managers, the new PMS regulations are an immediate mandate-design question: does your current client documentation and risk disclosure need updating to use the new IPO, unlisted-debt, and derivatives headroom? For enforcement-defence counsel, the settlement regulations consultation is worth responding to directly — the shape of that regime will determine negotiating leverage in every SEBI settlement for years to come.
Sources: Business Today · Zenith Financial Management · LiveLaw