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On August 6, the Securities and Exchange Board of India (SEBI) proposed significant changes to the Research Analyst (RA) and Investment Advisor (IA) Regulations through a new consultation paper. These proposed amendments aim to address the growing influence of unregistered financial influencers, or “finfluencers,” and streamline the regulatory framework for investment professionals.
The move follows comments from Sebi’s Whole-Time Member Kamlesh Varshney at Ficci’s 21st Annual Capital Markets Conference on August 2. Varshney outlined a comprehensive strategy to regulate finfluencers, part of which involves easing the regulatory requirements for registered advisors and analysts. The intent is to facilitate easier registration processes and bring more professionals under Sebi’s regulatory oversight.
Key proposals include reducing the minimum qualification for IA and RA registration from a post-graduate degree to a graduate degree. The amendments also suggest removing experience requirements and eliminating the mandatory minimum net worth criteria for advisors and analysts. Furthermore, Sebi is considering allowing entities to register as both IA and RA and is exploring options for part-time registration for individuals engaged in non-investment-related business activities.
Additional recommendations in the consultation paper include establishing a framework for segregating research and distribution services at the client level and creating guidelines for model portfolio recommendations by RAs. Sebi has also proposed clarifications regarding trading calls, distinguishing between those made after client risk profiling and product suitability assessments (falling under IA Regulations) and those made without such assessments (falling under RA Regulations).
Public comments on these proposed changes are invited until August 26, allowing stakeholders to provide input on the new regulatory adjustments.