Sebi proposes relaxing educational qualification criteria for IAs, RAs

Market regulator proposes to ease IA, RA registration and fee rules, broaden eligibility to all graduates, and allow past data sharing with client consent

The Securities and Exchange Board of India (Sebi) on Thursday proposed a slew of relaxations for investment advisors (IAs) and research analysts (RAs), including those relating to educational qualifications, provision of past performance data, and details sought during registration.

 

IAs and RAs may be allowed to share past performance data — along with relevant disclaimers — only with clients who specifically request it, and on a one-on-one basis. The market regulator had earlier introduced a performance verification agency to validate such claims amid concerns of misleading information.

 

The applicable period for sharing such past data would be limited to the time before the agency’s operationalisation.

 

Under the proposed norms, graduates from any discipline — including engineering and law — will also be eligible to apply for IA and RA registration. At present, only graduates in finance, business management, accountancy, commerce, economics, and capital markets are considered eligible.

 

However, applicants from other streams would still be required to pass certification examinations conducted by the National Institute of Securities Markets (NISM).

 

Another key proposal is to allow NISM to accredit educational programmes of external organisations as an alternative to the applicable NISM certification exams. 

 

Sebi has also proposed allowing investment advisors to provide second opinions to clients on pre-distributed assets, which are currently not covered under the fee-based advisory norms. IAs would be permitted to charge a fee for such services, capped at 2.5 per cent of the asset value per annum.

 

The regulator has further proposed measures to ease the transition from an individual investment advisor to a non-individual advisor, which becomes mandatory upon reaching 300 clients.

 

Other measures proposed to simplify the IA registration process include doing away with the requirement to provide address proofs of multiple persons and eliminating the need to furnish details of office space, equipment, research software, and other infrastructure.

 

Additionally, applicants will no longer be required to submit credit reports or CIBIL scores, nor provide net worth statements, assets and liabilities details, or income tax returns.

 

Sebi had recently overhauled the IA and RA regulations, significantly easing the registration process and associated requirements. The latest proposals continue this trend of regulatory simplification.