KDG

Administration & Supervision of Investment Advisers

As per SEBI (Investment Advisers) Regulations 2013, SEBI can also recognize any body/ body corporate for the purpose of recognizing Investment Advisers (IA’s). SEBI plans to delegate the administration and supervision of IA’s to such body/body corporate. 

Considering the growing number of registered IA’s, SEBI has decided to recognize a wholly-owned subsidiary of the Stock Exchange (stock exchange subsidiary) to administer and supervise IA’s registered with SEBI.

The important points to be noted for recognition are:

  • Criteria for Grant of recognition: The recognition of stock exchange subsidiary shall be based on the eligibility of the parent entity, i.e. the stock exchange, for which the following eligibility criteria is laid down:
  1. Number of years of existence – 15 years
  2. Stock exchanges having a minimum networth of 200 crores.
  3. Stock exchanges having nation-wide terminals
  4. Investor grievance redressal mechanism including arbitration
  5. Capacity for investor service management gauged through reach of Investor Service Centre (ISCs) – Stock exchanges having ISCs in at least 20 cities.
  • Setting-up of requisite systems by stock exchanges:
  1. The Stock exchange shall either form a subsidiary or designate an existing subsidiary for regulating IA’s.
  2. The subsidiary shall include in its MOA, AOA and bye-laws, requisite provisions to fulfill the below mentioned responsibilities.
  3. The subsidiary shall put in place systems/process for grievance redressal, administrative action against  IA’s, governing IA’s, maintaining data, sharing of information with SEBI etc. 
  4. The subsidiary shall have the necessary infrastructure like adequate office space, equipment and manpower to effectively discharge the mentioned activities. Infrastructure may be shared with other group entities where required.
  • Responsibilities of subsidiary of stock exchange: 
  1. Supervision of IA’s including both on-site and offsite.
  2. Grievance redressal of clients and IA’s
  3. Administrative action including issuing warning and referring to SEBI for enforcement action.
  4. Monitoring activities of IA’s by obtaining periodical reports.
  5. Submission of periodical reports to SEBI
  6. Maintenance of database of IA’s. 

Stock exchanges fulfilling the above criteria can apply to SEBI in next 30 days.