Sebi to relax norms for registered investment advisors, research analysts

The Securities and Exchange Board of India (Sebi) may early next week bring a proposal to relax norms for registered investment advisors (RIA) and research analysts, seeking to get more market participants through the formal route and to curb financial influencers' impact.

Kamlesh Varshney, a whole-time Sebi member, said on Friday the regulator plans a "specified digital platform" that will tell investors who is a RIA and it will streamline payments and transactions. He was speaking at a FICCI conference on capital markets.

According to industry estimates, there are more than 1,300 RIAs but only 300 of them are members of the association of RIAs (ARIA).

 

Not all RIAs are active and have raised concerns with the regulator on the stringent requirements for continuity of licences.

The market regulator had earlier barred its registered entities to partner or associate with any ‘unregistered’ entity, including the so-called finfluencers. This meant a curb on referrals and sponsorships from brokers and mutual funds to finfluencers.

Sebi has also warned unregistered entities from providing any advice or recommendation without formal registering with it.

RIAs feel that the environment is difficult for them due to high entry barriers and the requirement of passing two exams every three years to keep the registration valid. Further, the compliance requirements make the advising practice very tedious. RIAs have represented their concerns to the regulator.

Sebi’s proposals may aim to ease these entry barriers and requirements.

For continuing their registration, RIAs need to obtain NISM Series-X-A and X-B certification (level 1 and level 2, respectively) which needs to be refreshed every three year.

Role of RIAs and the registration has come into focus after Sebi’s stringent measures to curb misinformation, manipulation, or advice by financial influencers.

Varshney also called for measures to increase investor awareness.

The market regulator will also soon operationalise the performance validation agency which will verify the performance claims of investment products, trading algorithms, and other such services. As per sources, the National Stock Exchange will facilitate the PVA.