SEBI Update

SEBI has notified amendments to SEBI (Investment Advisers) Regulations, 2013. These amendments are  intended to strengthen the regulatory framework for Investment Advisers (IAs). The changes include:

  • Segregation of Advisory & Distribution Activities:
  1. Segregation of advisory and distribution activities at client level to avoid conflict of interest. In other words, it  bars providing of advisory and distribution to same clients.
  2. Option to be given to individual to register as IA or as a distributor.
  3. Non-individual IA to also maintain client level segregation at group level for both the above captioned activities and maintain an arm’s length relationship between these two activities by providing advisory services through a separately identifiable department/ division.
  • Implementation Services: IA are allowed to provide implementation/ execution services through direct schemes/ products in securities  market. Further, the said IA cannot receive consideration (directly or indirectly) for providing the said service  either at group entities level or family level. This effectively means that the execution services have to be  free of cost.  
  • Agreement between IA and client: Mandatory agreement to be entered between IAs and the Client for greater transparency
  • Fees: The fees charged to a client by IAs for providing Investment advice shall be in manner as specified by SEBI.
  •  Eligibility Criteria for IAs:  
  1. Enhanced criteria for getting registered as IAs includes net worth of Rs.50 lakhs for non-individuals and Rs.5  lakhs for individuals.
  2. Enhanced professional or post graduate qualification in relevant subjects and relevant experience of 5 years  to be compulsory for Individual IAs or Principal Officer of non-individual IA. 
  3. Individual IAs whose number of client exceeds 150 in total, shall apply for registration with SEBI as non individual investment adviser.

Kindly note that any person or firm that for compensation is engaged in business of providing advice to others  or issuing reports or analysis related to securities markets is considered to be an Investment Adviser and is  compulsorily required to get registered with SEBI as Investment Adviser.