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Informist, Tuesday, Aug 6, 2024

 

MUMBAI – The Securities and Exchange Board of India has proposed several changes to the regulations pertaining to investment advisers and research analysts in a public consultation paper issued today. The markets regulator has invited suggestions from the public and market consultation on these proposals by Aug 26.

 

SEBI has proposed major relaxations in the qualification, certification, experience, and net-worth criteria for being eligible to register as advisers and analysts. It now proposes that graduation be enough to qualify. Currently, a post-graduation degree or diploma is the minimum qualification required.

 

The SEBI paper also recommends doing away with the requirement of experience for individual investment advisers. At present, the regulations require them to have five years of experience in the field.

 

In another proposal, the requirement of a minimum net worth of 500,000 rupees for individual advisers and 100,000 rupees for analysts is sought to be replaced with a requirement to mark a deposit lien to stock exchanges. SEBI has proposed a deposit amount of 100,000 rupees for up to 150 clients, going up in slabs to the highest level of 1 mln rupees for more than 1,000 clients.

 

The markets regulator is also keen to disallow investment advisers from providing investment advice on assets such as physical gold and real-estate property and homes, or providing ancillary services such as estate planning and tax planning. Currently, there are no restrictions on the scope of investment advice.

 

SEBI noted in the paper that investment advisers have a fiduciary duty towards their clients. In case of unregulated products and services, there could be a conflict of interest and clients may not have recourse to securities laws under the jurisdiction of SEBI or laws under other financial sector regulators such as the Reserve Bank of India.

 

In another important proposal, the SEBI paper seeks to disallow individuals from being research analysts if there is no payment of consideration by clients for the services rendered by them. The regulator said in the consultation paper that the current definition of research analyst "does not particularly mention the aspect of payment of consideration for the services provided by RA (research analyst) and thus is open to arbitrary interpretation of the scope of research services."  End

 

Reported by Rajesh Gajra

Edited by Rajeev Pai

 

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