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New norms for alternative investments soon

New norms for alternative investments soon

Although Sebi chief did not disclose the areas that will be included under the new regulation, alternative investment schemes generally cover art works, antiques, coins and stamps, as well as a host of other instruments besides popular avenues like stocks, commodities and derivatives.

In order to safeguard investors from falling prey to dubious schemes of portfolio managers, capital market regulator Sebi will soon come out with guidelines for alternative investments.

The issue was discussed at the Sebi board meeting in Mumbai on Thursday, after which Chairman U K Sinha announced that the regulator will soon frame rules to govern alternative investments and portfolio wealth managers.

Although Sinha did not disclose the areas that will be included under the new regulation, alternative investment schemes generally cover art works, antiques, coins and stamps, as well as a host of other instruments besides popular avenues like stocks, commodities and derivatives.

The new rules would also apply to an estimated $1 trillion wealth management industry.

As part of the proposed regulatory framework for alternative investments, Sebi is already planning to set up an intermediary regulatory body with representation from among the wealth managers themselves.

The new rules would cover entities offering wealth management or investment advisory services across various asset classes irrespective of the different financial markets.

These would include stocks, commodities, fixed deposits, derivatives, insurance, mutual funds, private equity, pension funds as also alternative investment products such as funds investing in art works, antiques, coins and stamps.

For past few months, Sebi has been in consultation with the government, RBI and other financial regulators for framing a new set of rules for the wealth managers.