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Informist, Thursday, Aug. 7, 2025

 

--SEBI moots measures to ease invest advisers, research analysts business 

--SEBI moots invest advisers, analysts can give past performance to clients 

--SEBI moots relaxation of educational norms for invest advisers, analysts

 

MUMBAI – The Securities and Exchange Board of India Thursday floated a consultation paper seeking views on proposals related to amendments to the regulatory framework for investment advisers and research analysts with the objective of facilitating ease of doing business and addressing practical challenges in the current framework. This consultation paper aims to bring in regulatory changes commensurate with the continually evolving nature of the investment adviser and research analyst industry, the SEBI said. 

 

The changes recommended in the paper include permitting investment advisors and research analysts to provide past performance to clients. Earlier, the Past Risk and Return Verification Agency said that advisers and analysts will not be able to provide past data as it is not verified by the agency.

 

The associations of advisers have told SEBI that their inability to provide past performance details to clients limits their ability to serve clients and deprives clients of material relevant information for their investment decisions, according to the paper. The associations also said that past risk and return verification may disregard the past hard work of legitimate professionals. 

 

However, "...allowing unrestrained claims of past performance may be prone to misuse by unscrupulous elements in luring and misleading investors," the paper said. So, advisers and analysts may be allowed to provide past performance data but with certain disclosures, the SEBI said. 

 

The data shall only be advertised or provided to client using risk and return metrics verified by Past Risk and Return Verification agency, the SEBI said. The data shall be communicated to clients on a one-to-one basis and such past performance data shall not be made available to the general public through public media, the paper said. 

 

After two years from the date of operationalisation of Past Risk and Return Verification agency, analysts will not be permitted to use such past performance data related to the period prior to the date of operationalisation of the agency, in any communication to clients and will be able to show only verified risk and return metrics.

 

The association has also proposed that the advisers should be permitted to charge assets under advice-based fee and provide second opinion to their clients. It was also proposed that investment advisers may be permitted to charge fees on the assets under pre-distribution arrangement, subject to a limit of 2.5% of such assets value per annum.

 

The paper further proposed that an individual adviser shall immediately intimate the Investment Advisers Administration and Supervisory Body once they reach the threshold of 300 clients or collect fees of INR 30 million in a financial year, whichever is earlier. Upon completion of the transition to a non individual adviser the adviser should surrender the registration certificate as an individual adviser and shall receive a registration certificate as non-individual adviser. "During the transitioning period, advisers will be permitted to on board new clients and collect fees in excess of threshold limit," the paper said. 

 

Further, in order to simplify the registration process for adviser applicants, the paper proposes to do away with the requirement of providing proofs of addresses of multiple persons, as specified in the current regulations. Applicants shall also not be required to submit specific details regarding office space, office equipment, furniture and fixtures, communication facilities, research capacity, research software, at the time of registration.

 

The paper also proposes to remove the requirement of submission of credit report or CIBIL score for the applicant for registration as an investment adviser as the process is redundant because that data is checked by SEBI under pre-existing regulations anyway. The removal of the requirement of submission of details of net worth, assets and liabilities, income tax returns, Form 16 for registration as adviser or analyst has also been proposed. The consultation paper also proposes to revise the minimum educational qualification and certification requirement for registration as an investment adviser. 

 

SEBI has invited comments on the proposals by Aug. 28.  End

 

Reported by Kabir Sharma

Edited by Deepshikha Bhardwaj

 

 

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