SEBI Specifies Standardized ‘Terms of Reference’ for Audit of Firm-level Performance Data of Portfolio Managers
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- Last Updated on 4 August, 2023
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Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/133, Dated: 02.08.2023
Earlier, SEBI vide Master Circular dated March 20, 2023, mandated Portfolio Managers to submit audit reports on firm-level performance data to SEBI within 60 days from the end of each FY.
As per the aforesaid requirement, portfolio managers are obligated to consider all clients’ portfolios managed (i.e. clients of both discretionary and non-discretionary portfolio management services) for the purpose of audit of firm-level performance data.
In order to bring uniformity, the Association of Portfolio Managers in India (APMI), in consultation with SEBI, has specified standardized Terms of Reference (ToR) for the aforesaid audit of firm-level performance data.
The standard ToR shall include the requirement for portfolio managers to consider clients’ portfolios under all services for the purpose of audit of firm-level performance data.
However, the performance of advisory clients can be excluded only if the performance of such clients, either individually or cumulatively, is not reported or published in any marketing material or website.
Portfolio managers are required to submit the confirmation of compliance with the requirement of an annual audit of firm-level performance data in line with the standard ToR specified by APMI, to SEBI within 60 days from the end of each financial year.
The report on confirmation of compliance to SEBI needs to be certified by directors/partners of the portfolio manager or by persons authorised by the Board of Directors/partners of the portfolio manager.
Further, the standard terms specified by APMI shall be applicable w.e.f 01.10.2023 and are required to be mandatorily followed by all portfolio managers for the purpose of the annual audit of firm-level performance data.
This move by SEBI to mandate portfolio managers in India to submit audit reports on firm-level performance data and follow standardised terms marks a significant step towards enhancing transparency, accountability and uniformity in the portfolio management industry. The inclusion of clients’ portfolios and the requirement for timely compliance reporting will likely promote investor trust and reinforce market credibility.
Click Here To Read The Full Circular
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