Sebi eases norms for boarding of investment advisors, research analysts

Allows part-time advisors and analysts, reduces compliance requirements

The Securities and Exchange Board of India (Sebi) has introduced major changes in the norms governing investment advisors and research analysts (RAs), relaxing requirements on minimum qualification, experience, mandatory examination to be passed periodically, and net worth requirements.

 

Market regulator has made the changes at a time when the number of registered investment advisors (RIAs) has come down to less than 1000.

 

The changes, approved in the September board meeting, have now been notified, introducing the amendments in regulations governing both RIA and RAs.

 

The changes reduce compliance requirements to encourage more players under the regulatory fold. The new norms also allow registrations for part-time investment advisors and research analysts. Further, trading calls have been excluded from the definition of “investment advice”.

 

The industry had called for relaxing the regulations after Sebi had cracked the whip on financial influencers who are not registered with the regulator.

 

The minimum qualification has been reduced to graduation while the requirement for prior experience has been done away with. While base certifications from NISM will be required initially for registration, the need for repeating the base examination subsequently has been removed.

 

 “A fresh relevant NISM certification as specified by the Board from time to time shall be obtained before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirement,” noted the regulation.

 

The net worth requirements have also been replaced with a reduced requirement of deposits.

 

Additionally, individual investment advisors who have over 300 clients or if their fee collection is over Rs 3 crore in a financial year will have to apply for in-principle registration as non-individual investment adviser. Till now, this was limited to only 150 clients. For part-time advisors, the limit has been set at 75 clients.

 

RIAs and RAs will also have to disclose to the clients if they are using artificial intelligence tools.

 

Research analysts will also have to do KYC of their fee-paying clients. Further, the family of an individual research analyst is restricted from providing distribution services to the same clients. Sebi has also called for group level segregation of businesses in case of non-individual RA.

 

Sebi has also specified the applicability of norms on those offering model portfolios. 

Sebi approves change in control at Religare Broking

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