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SEBI Bans Portfolio Managers From Charging Upfront Fees

Professor of Financial Economics and Part-time Value Investor, Transfin.
Feb 17, 2020 1:25 AM 1 min read

SEBI bans portfolio managers from charging upfront fees - directly or indirectly.



SEBI bans portfolio managers from charging upfront fees.

The markets regular, SEBI has banned portfolio managers from charging upfront fees from clients either directly or indirectly.


Brokerage should be charged at actual to clients as expense.


Portfolio management services (PMS) providers can continue to charge annual fees, as a percentage of the investor's corpus.


“Operating expenses excluding brokerage, over and above the fees charged for portfolio management service, shall not exceed 0.50% per annum of the client’s average daily assets under management,” SEBI said in a circular on Thursday.


The circular comes on the back of several other regulations affecting PMS which have been introduced by the regulator over the last couple of months such as raising the minimum ticket size for PMS from ₹25L ($35,104) to ₹50L ($. The circular will become effective 1 May. [Deccan Herald]


Read SEBI's official circular here.


Breaking it Down

Here's a handy tweet, which gives the highlights of the circular. 


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