 "sebi")
Sebi had previously barred registered entities from partnering or associating with any ‘unregistered’ entities,
The Securities and Exchange Board of India (Sebi) will soon propose relaxing norms for registered investment advisors (RIAs) and research analysts to facilitate more participants entering through the formal route and to curb financial influencer activities.
Sebi whole-time member Kamlesh Varshney announced on Friday that the proposal might be introduced by early next week. He added that the regulator will also launch a ‘specified digital platform’ to provide clarity to investors on who is registered and to streamline payments and transactions.
According to industry estimates, there are over 1,300 registered investment advisors, with only 300 of them being members of the Association of Registered Investment Advisors (ARIA).
However, not all are active, and some have raised concerns with the regulator regarding the stringent requirements for maintaining their licenses.
The market regulator had previously barred registered entities from partnering or associating with any ‘unregistered’ entities, including financial influencers. This restriction also curtailed referrals and sponsorships from brokers and mutual funds to financial influencers.
Sebi has also warned unregistered entities against providing any advice or recommendations without formal registration with the regulator.
RIAs argue that the current environment is challenging due to high entry barriers and the requirement to pass two exams every three years to maintain registration. The compliance requirements also make the advising practice cumbersome. RIAs have raised these concerns with the regulator.
Sebi’s proposals are expected to address these entry barriers and requirements.
To maintain their registration, RIAs must obtain NISM Series-X-A and X-B certifications (levels 1 and 2, respectively), which need to be renewed every three years.
The role of RIAs and their registration has gained prominence following Sebi’s stringent measures to curb misinformation, manipulation, or advice by financial influencers.
Speaking at the FICCI conference on the capital market, Varshney also called for measures to increase investor awareness.
The market regulator will also soon operationalise the performance validation agency (PVA), which will verify the performance claims of investment products, trading algorithms, and similar services. According to sources, the National Stock Exchange (NSE) will facilitate the PVA.
First Published: Aug 02 2024 | 1:09 PM IST
