Panel Paves Way For Pms In Derivatives

Portfolio management schemes (PMS) will now be able to invest in derivatives products in the market.

This was among the recommendations made by the committee set up by the Securities and Exchange Board of India (Sebi) to look into PMS at a meeting of portfolio managers held the week before last.

At the last meeting, held more than a year back, some of the issues raised included allowing portfolio managers to invest in deferral products such as automated lending and borrowing mechanism and borrowing and lending of securities system.

However, now that the deferral products are no longer in existence the committee decided to scrap these recommendations.

According to sources, the most logical thing was to allow portfolio managers to invest in derivatives which have taken the place of deferral products.

These recommendations were duly incorporated in the meeting held with portfolio managers. The report in expected to be finalised in a day or two, sources said. Investing in derivatives products will allow portfolio managers greater investment manouverability as well as hedge on risks in the underlying cash market.

Some minor procedural changes are also being made to the portfolio investment schemes in order to tighten reporting and disclosure requirements, sources said.