Portfolio Manager Dealing-Room Relaxation for Fewer Than 10 Clients or AUM Below ₹100 Crore: SEBI Proposal
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
The proposed dealing-room relaxation for small Portfolio Managers sits inside SEBI's 23 July 2026 comprehensive PMS consultation. The fewer-than-10-clients / below-₹100-crore concept is a proposal, not a current exemption.
Finin2min 2-Minute Summary
- SEBI's 23 July PMS review is a consultation paper.
- The small-manager dealing-room relaxation described in the register should not be implemented until a final operative SEBI instrument is issued.
- Small client count or AUM does not remove best-execution, order, conflict, allocation, record and cyber controls.
- A firm considering the proposal should document how it will preserve segregation and audit trail without a dedicated dealing room.
- Threshold monitoring should be automatic so a firm does not remain on a relaxation after growing beyond the final limit.
Do not convert the proposal into an exemption
The current Portfolio Managers Regulations and Master Circular continue to govern. A firm with nine clients or ₹90 crore AUM should not dismantle controls merely because the consultation proposes relief.
Keep the proposed threshold in a sandbox readiness policy and activate it only if final wording adopts it.
What controls must survive a physical-room relaxation
Order initiation, approval, timestamp, broker selection, client allocation, personal-dealing restrictions, restricted lists, call/message retention and exception review remain relevant. The risk is not the room; it is uncontrolled dealing.
For work-from-office/hybrid setups, define authorised devices, recorded channels and access restrictions.
Threshold monitoring
Client count and AUM can cross a boundary mid-period. Design a daily/monthly dashboard depending on the final rule and create a transition plan for the date on which the firm ceases to qualify.
Do not manipulate account grouping or valuation timing to remain below a threshold.
Small PMS case: no dealing room does not mean no dealing controls
Imagine a boutique PMS with eight clients and ₹75 crore AUM. Under the consultation concept it may eventually qualify for dealing-room relaxation, but the same employee could still place orders across clients, handle restricted information and allocate fills. The compliance risk therefore moves from physical segregation to digital and supervisory segregation.
A workable alternative would require authorised terminals, recorded order channels, restricted-list checks, pre/post-trade review, allocation rules and periodic surveillance. If the business grows to twelve clients or ₹120 crore, a threshold-triggered transition should restore whatever controls the final framework requires without a rushed rebuild.
- Design digital segregation before relying on physical-room relief.
- Keep client allocation and personal-dealing surveillance.
- Prepare a growth-trigger transition plan.
Evidence of supervisory review
Where a small PMS eventually operates under relaxed physical infrastructure, supervisory review should still leave evidence: sampled orders, allocation checks, restricted-list exceptions and personal-dealing surveillance. Small size can simplify process, but it should not make supervision invisible.
- Document periodic dealing surveillance.
- Sample allocation and restricted-list compliance.
Proposal-readiness checklist
- Consultation status explicit.
- Current PMS controls retained.
- Order/dealing audit trail mapped.
- Client/AUM threshold monitor.
- Remote/hybrid access controls.
- Growth-trigger transition plan.
- Final SEBI adoption tracked.
Questions readers commonly ask
Is the relaxation live now?
No. It is part of a July 2026 consultation.
Can a small PMS stop keeping dealing records?
No. Core order and conflict controls remain important regardless of physical setup.
Why monitor AUM continuously?
A final threshold-based relief could stop applying as the business grows.
Which current sources govern meanwhile?
The Portfolio Managers Regulations and Master Circular.
Official / primary sources
- SEBI PMS Consultation - 23 July 2026 proposal
- SEBI Portfolio Managers Regulations - Current regulations
- SEBI Portfolio Managers Master Circular - Current operating framework
Disclaimer
Important: General educational and professional-reference material. Verify the current operative regulation/circular, portal version and exact facts before acting. Consultation papers are proposals unless a later operative instrument adopts them. Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.