Sebi proposes relaxing norms for investment advisers and analysts, floats consultation paper
Aug 7, 2024, 08:47 IST
New Delhi: Markets regulator Sebi on Tuesday proposed relaxing net-worth, qualification and experience requirements for investment advisers and research analysts, a move aimed at curbing the activities of unregulated financial influencers. The proposals will simplify and reduce registration requirements and compliance costs for Investment Advisers (IAs) and Research Analysts (RAs) registered with Sebi, the regulator said.
In its consultation paper, Sebi has proposed to relax minimum qualification from post-graduate to graduate degree and remove the experience requirement for registration as investment advisers and research analysts.
Currently, IAs and RAs are required to obtain the prescribed certifications from NISM at the time of registration. They are required to obtain the same base certifications before expiry of validity of such certifications.
Additionally, the regulator has proposed to abolish the requirement of maintaining minimum net worth by IAs and RAs. Instead, it has proposed that IAs/RAs should maintain a deposit with the stock exchange, based on the number of clients.
For up to 150 clients, investment advisers or research analysts will have to maintain a deposit of Rs 1 lakh, for 150 to 300 clients, they need to maintain Rs 2 lakh, for 300 to 1,000 clients, the deposit requirement will be Rs 5 lakh and for over 1,000 clients, the requirement will be Rs 10 lakh.
Also, Sebi has proposed allowing individuals or partnership firms to register as both IA and RA and allow individuals or partnership firms engaged in non-securities businesses to register as IA/RA.
Sebi noted that the Indian securities market has seen a significant increase in domestic investors due to market growth and technical advancements. However, the number of registered Investment Advisers and Research Analysts remains low compared to the large investor base, especially when compared to countries like the United States.
"This is leading to proliferation of the unregistered entities acting as IAs and RAs," it added.
To ensure investors can make informed decisions and to support the growth in wealth creation, a larger number of registered IAs and RAs is needed, the Sebi said.
Recently, Sebi board approved a series of measures on restricting the play of fin-influencers, which focus mainly on policing the segment through their tie-ups with the entities regulated by Sebi.
The registered investment advisors have said that getting and maintaining the registration is an onerous task due to which their numbers are low.
The Securities and Exchange Board of India (Sebi) has sought public comments till August 26 on the proposals.
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In its consultation paper, Sebi has proposed to relax minimum qualification from post-graduate to graduate degree and remove the experience requirement for registration as investment advisers and research analysts.
Currently, IAs and RAs are required to obtain the prescribed certifications from NISM at the time of registration. They are required to obtain the same base certifications before expiry of validity of such certifications.
Additionally, the regulator has proposed to abolish the requirement of maintaining minimum net worth by IAs and RAs. Instead, it has proposed that IAs/RAs should maintain a deposit with the stock exchange, based on the number of clients.
For up to 150 clients, investment advisers or research analysts will have to maintain a deposit of Rs 1 lakh, for 150 to 300 clients, they need to maintain Rs 2 lakh, for 300 to 1,000 clients, the deposit requirement will be Rs 5 lakh and for over 1,000 clients, the requirement will be Rs 10 lakh.
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Sebi noted that the Indian securities market has seen a significant increase in domestic investors due to market growth and technical advancements. However, the number of registered Investment Advisers and Research Analysts remains low compared to the large investor base, especially when compared to countries like the United States.
"This is leading to proliferation of the unregistered entities acting as IAs and RAs," it added.
To ensure investors can make informed decisions and to support the growth in wealth creation, a larger number of registered IAs and RAs is needed, the Sebi said.
Recently, Sebi board approved a series of measures on restricting the play of fin-influencers, which focus mainly on policing the segment through their tie-ups with the entities regulated by Sebi.
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Also, senior Sebi officials in the recent past have said that challenges to get registered as an investment advisor are among the reasons for growth in the problematic fin-influencers segment. The registered investment advisors have said that getting and maintaining the registration is an onerous task due to which their numbers are low.
The Securities and Exchange Board of India (Sebi) has sought public comments till August 26 on the proposals.