Portfolio management services require agreed client fees without any direct or indirect guarantee or assurance of returns. Discretionary portfolio management must be independently tailored to each client's needs and must not have the character of a retail fund, while non-discretionary management must follow client directions. The FME must ensure compliant distribution, report performance uniformly across required disclosures and communications, conduct annual audits of managed portfolio accounts, and provide the audit certificate to each client.

Portfolio management must follow the client agreement, and derivatives investments require express client consent. Client transactions must generally involve actual delivery or transfer of securities, except derivatives. Client funds and securities must remain segregated from the FME's assets. Aggregated transactions require pro rata allocation at the weighted average price without open allocation positions. Omnibus accounts require prior consent and separate earmarking of client securities. Portfolio managers, except advisory-only providers, must appoint a custodian.

An FME must observe a minimum investment threshold for portfolio management clients, subject to an exemption for accredited investors. Client funds may be held through specified FME, client, or regulated broker-dealer accounts, subject to operational authority, compliance controls, and disclosure of account and transaction details when directed. Client securities must generally be segregated, with omnibus structures permitted only with prior client consent and separate earmarking. The FME must accurately record client account movements, act in a fiduciary capacity, avoid benefiting from client assets, and not borrow on a client's behalf.

Portfolio management client reporting requires the FME to furnish periodic reports in accordance with the client agreement. Reports must include the portfolio's composition and value, transactions undertaken during the reporting period, beneficial interest received, management expenses, and risks relating to securities recommended for investment or disinvestment by the portfolio manager. Each report may be provided online through access restricted to the relevant client.

Portfolio management agreements must be written and define the relationship, rights, liabilities and obligations of the Fund Management Entity and client, including investment objectives, risks, fees and contract duration. Client funds or securities may be withdrawn before maturity despite contrary contractual terms if either party terminates portfolio management services, the Fund Management Entity's registration is suspended or cancelled, or it enters bankruptcy or liquidation.

Portfolio management disclosure requirements require an FME to provide a disclosure document before entering into a portfolio management agreement and to publish it on its website. The disclosure must address services, risks, client representation, financial and portfolio-manager performance, auditor observations, expenses, taxation, investor grievance redressal, and regulatory litigations involving the portfolio manager and specified senior persons.

Registered FMEs may provide portfolio management services to non-residents, non-resident Indians, and Indian residents eligible under FEMA to invest or remit funds offshore within applicable limits. An IFSC portfolio manager may invest in securities and financial products in an IFSC, India, or a foreign jurisdiction. Discretionary portfolio management services are limited to listed, proposed-to-be-listed, or traded securities, money market instruments, units of investment schemes, and other financial products specified by the Authority.

Fund management entities managing assets under management above the prescribed threshold must establish governance policies for material sustainability-related risks and opportunities and disclose their risk-management and investment-integration processes annually. FMEs launching ESG-related schemes must disclose the investment objective, policy, strategy, material risks and benchmark. Scheme documents must state whether sustainability-related risks are incorporated into investment decision-making, with a negative statement required where they are not incorporated.

ETF offer documents must provide all material information required for informed investment decisions, including investment objectives, investor profile, strategy, methodology, fees, expenses, risk management, and relevant fund management entity and ETF details. Material changes to fund strategy require consent from at least two-thirds of investors by value. NAV must be disclosed daily, ETF portfolios must be disclosed in the stated manner, and any further material information must be communicated immediately. Fund management entities and fiduciaries must ensure compliance with applicable disclosure requirements.

Direct redemption of ETF units is available to investors other than market makers through the Fund Management Entity without an exit load where market-pricing or liquidity conditions are met. These conditions include a closing traded-price discount exceeding five per cent of NAV for 30 continuous trading days, absence of quotations on a recognised stock exchange for five consecutive trading days, or inadequate aggregate bid size averaged over seven consecutive trading days.

Each FME must calculate the NAV of every ETF daily, publish it on its website, and notify the recognised stock exchange on which the ETF is listed for website disclosure. NAV calculation procedures and methodology must be comprehensively documented, regularly verified, and amended where necessary.

Regulation 68 requires a Fund Management Entity to appoint a market maker to ensure ETF trading liquidity through two-way quotes. Market makers may create units and seek redemptions directly from the Fund Management Entity. Recognised stock exchanges may simplify authorisation for registered intermediaries and must frame rules on spreads, minimum quantities, incentives, margining and net settlement.

Actively managed exchange-traded funds permit the fund management entity to exercise discretion over portfolio composition in accordance with stated investment objectives and policies. Offer documents and advertising material must disclose their actively managed status and explain how stated objectives, including intended index outperformance where applicable, will be met. Draft offer documents must be filed with the recognised stock exchange or exchanges proposed for listing and with the Authority.

Silver ETFs must maintain predominant investment in silver or eligible silver-backed bullion instruments, with derivative exposure generally limited unless physical delivery is intended. They must track a recognised spot-silver benchmark with minimal tracking error. Physical silver must be responsibly sourced from an OECD-compliant certified refiner and stored in a registered vault. Independent physical verification is required half-yearly, with reports furnished to the fund management entity and fiduciaries within the prescribed period.

Gold ETFs must maintain at least 90% of assets under management in gold or eligible bullion instruments. Gold-based exchange-traded commodity derivatives are generally limited to 10% of assets, unless physical delivery is intended instead of rolling over derivative positions. ETFs must track an approved spot-gold benchmark with minimal tracking error. Physical gold must be responsibly sourced from certified refiners, stored in a registered vault, and independently verified every half-year, with reports submitted to the fund management entity and fiduciaries within two months.

GST refund applications must be decided within prescribed timelines, as delay beyond 60 days from receipt of an application may trigger interest liability. Refunds may be granted only after field verification of the applicant firm's registered premises to establish genuineness, with documentary records maintained by the proper officer. Signed fortnightly, ward-wise refund reports must record decisions, delayed and pending applications, sanctions, rejections and interest paid, and be consolidated for submission to the Commissioner, State Tax.

Commodity-based ETFs must invest at least 90% of their assets in the specified commodity or commodity-related security or instrument identified by the Authority. A Fund Management Entity launching a commodity-based ETF must designate a Key Managerial Personnel with at least five years' experience in commodities as the Fund Manager.

A Fund Management Entity may launch an ETF replicating a debt index of the IFSC, India, or a foreign jurisdiction. Replicating indices must generally contain at least five issuers, limit each issuer's weight, and comprise investment-grade constituents, subject to an exception for Government securities. The ETF must replicate its underlying index to at least 90 per cent of total assets. Deviations caused by unavailable constituent issuances must minimise tracking error and conform to offer document disclosures.

An ETF replicating a particular equity index must track an index comprising at least ten constituent stocks. In a sectoral or thematic index, any single stock's weightage must not exceed 35 per cent; in every other index, the corresponding cap is 25 per cent. The ETF must replicate its underlying index to at least 95 per cent of total assets.

Regulation 61 permits only Registered FMEs (Retail) to launch ETFs after filing a draft offer document and applicable fees at least twenty-one working days before launch. Authority comments must be incorporated before launch, and material changes must be immediately reported. ETFs must be listed and traded on a recognised stock exchange. Fiduciary approval is mandatory before filing, while actively managed and other approved ETFs require prior stock exchange approval. IFSC-listed ETFs must use the identifier "IFSC ETF" in their name, offer document, and advertising material.