India’s market regulator will allow its $463-billion portfolio management industry to invest in overseas securities and undertake short selling in equity options for the first time as part of a massive overhaul of rules. The Securities and Exchange Board of India will also allow portfolio managers to invest in unlisted debt securities and up to 1.25 times their clients’ assets in exchange-traded derivatives.

Portfolio managers will also be allowed to take unhedged short positions up to a prescribed limit of clients’ corpus, the regulator said at a media briefing, without defining the cap. The changes mark a significant expansion of investment options for an industry that has grown rapidly as wealthy Indians increasingly seek professionally managed and customized investment products.

Portfolio managers oversaw about 44.4 trillion rupees of assets as of August, up from 40 trillion rupees a year ago. The measure comes as India grapples with a weaker currency against the dollar amid persistent foreign outflows. Foreign investments in equity and debt will be allowed under the Liberalized Remittance Scheme, which permits resident Indians to remit as much as $250,000 abroad each financial year.

Separately, SEBI allowed the entry of foreign portfolio investors in non-cash-settled, non-agricultural commodity derivatives and approved a new ‘mutual fund-only’ portfolio management service product with a minimum investment of 2.5 million rupees.