PMS trading index options

Hi @nithin

Is PMS allowed in India for index options? or stock options

what are the rules and regulations?

Hy @Harsha2 Yes PMS are allowed to invest under derivative segments only to the extent of the value of the portfolio.This is usually done for the purpose of hedging and portfolio balancing.

Highlighting few points from the circular.

"The Agreement should contain complete details pertaining to the manner and terms of usage of derivative product including quantum of exposure to derivatives (in absolute terms and as a percentage of investments in other securities in the portfolio), type of derivative instruments, purpose of using derivatives, type of derivative position and the exposure thereof, terms of valuing and liquidating derivative contracts in the event of liquidation of portfolio management scheme, prior permission from investors in the event of any changes in the manner or terms of usage of derivative contracts etc.

It may be clearly noted that investment in derivatives shall be on terms mutually agreed between the portfolio manager and the client through the portfolio management agreement. In the event of the any violation of the terms of the agreement, the portfolio manager shall be responsible"

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