Sebi proposes changes to regulations governing investment advisors, research analysts. Check details

The Securities and Exchange Board of India (Sebi) has proposed to relax registration requirements and cost of compliance for Investment Advisors (IAs) and Research Analysts (RAs) by amending/clarifying the existing regulations. On Tuesday, the market regulator issued a consultation paper, seeking comments from the public to put in place what it said would be a conducive regulatory framework.

Suggestions can be sent till August 26.

Currently, IAs and RAs are governed by the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 and Securities and Exchange Board of India (Research Analysts) Regulations, 2014.

The consultation paper comes pursuant to the 2023-24 budget announcement which called for simplifying, easing and reducing cost of compliance by comprehensive review of existing regulations.

SEBI constituted 16 Working Groups to recommend simplification of various SEBI Regulations and to look into the compliance requirements to enhance ease of compliance and reduction in cost of compliance.Following this, SEBI invited suggestions from public and regulated entities through an October 4, 2023 press release.Among the proposals, the market regulator has proposed relaxation in eligibility criteria for IAs and RAs. This is regarding minimum qualification, certification, experience and net worth. It has proposed to relax the existing minimum qualification requirements for registration as IA or RA from a post-graduation to a graduate degree.There is also a proposal to tweak compliance requirements for obtaining base certifications. Currently, IAs and RAs are required to obtain the prescribed certifications from NISM (NISM-Series-XA and XB for IAs, and NISM-Series-XV for RAs) (base certifications) at the time of registration. They are also required to obtain the same base certifications before expiry of validity of such certifications.

Under the current proposal, the IAs and RAs will be required to obtain the base certifications only initially at the time of registration. Thereafter, they will be required to obtain a certification that will be based only on the incremental changes or developments during the previous three years or a period of time as may be specified.

The proposal also recommends having no requirement of experience for registration as IAs and RAs.

The consultation paper has also proposed for having no requirement of any net worth for IAs and RAs. Under the existing scheme, IAs should have a minimum net worth of Rs 5 lakh while RAs must have a minimum worth of Rs 1 lakh.

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