Sebi lets PMS into commodity derivatives a day after setting rules for MFs

No participation without client agreements; custodian a must; sale of physical delivery based on agreed timeline between PMS and client

A day after opening up the commodities derivatives segment to mutual funds, Sebi issued a circular on Wednesday, allowing portfolio management schemes to invest in this avenue on behalf of their clients. They will have to enter into agreements with clients for this, and managers in charge of PMS have to appoint a custodian for this activity as well.

Interestingly, when managers of portfolio have to take physical delivery they will have to dispose of it at the earliest with clients’ permission and for this they have to agree on timeline for such disposal. From the circular, it is not