Context:
With the May 9 deadline fast approaching for Alternative Investment Funds (AIFs) to comply with Securities and Exchange Board of India (SEBI)‘s certification mandate for fund managers, industry stakeholders are pushing for relaxations. The core issue revolves around the National Institute of Securities Markets (NISM) Series XIX-C certification exam, which is proving to be a challenge for many fund managers, especially given its broad scope.
Key Points of the SEBI Certification Mandate
- As per SEBI’s regulations introduced in May 2024, at least one key member of an AIF’s investment team must pass the NISM Series XIX-C: Alternative Investment Fund Managers Certification Examination.
- This certification is mandatory for both existing AIF schemes (by the May 9, 2025 deadline) and for new AIF registration applications.
- The exam covers a broad range of topics across various AIF categories, including Category I, Category II, and Category III funds.
Challenges Faced by Fund Managers
- Wide Scope of the Exam: The exam covers all AIF categories, but many fund managers specialize in only one or two categories, making parts of the test theoretical rather than practical for their specific roles.
- Difficulty in Passing: Many fund managers are struggling to clear the NISM Series XIX-C exam, as it emphasizes regulations and operations across all categories, even for managers who only handle niche sectors.
Industry Response and Discussions
- Extension of Deadline: AIF representatives are seeking an extension for the May 9 compliance deadline, citing the difficulty in passing the exam within the given time frame.
- Segregation of Exam Categories: There is also a push for separating the exam into different segments based on AIF categories. This approach would allow fund managers to focus on the areas most relevant to their specialized work, rather than the broad and sometimes irrelevant content that currently makes up the exam syllabus.
- NISM’s Role: The National Institute of Securities Markets (NISM) has reportedly been instructed by SEBI to develop separate tests for each AIF category. Consultations with fund managers are underway to revise the syllabus accordingly, with hopes that this change will be implemented before the May 9 deadline.
Current Status
- Although a decision on extending the deadline has not been finalized, discussions between SEBI and NISM are ongoing, with a focus on creating more tailored exams for fund managers based on their specific categories of expertise.
- The AIF sector has grown rapidly, with total commitments reaching ₹13.05 trillion by December 2024, signaling the sector’s increasing importance.
As the May 9 compliance deadline approaches, AIFs and fund managers are advocating for changes to the NISM Series XIX-C certification exam. The current one-size-fits-all approach is proving to be burdensome, particularly for managers who specialize in specific categories. Adjustments to the exam format, including potential category-specific tests, could alleviate some of the pressure and better reflect the real-world roles of fund managers in the growing AIF sector.
