The Securities and Exchange Board of India (SEBI) has proposed significant relaxations to the regulations governing investment advisors (IAs) and research analysts (RAs) in India. By easing the regulatory burden, SEBI aims to encourage more individuals to become registered IAs and RAs, thereby increasing the pool of qualified professionals in the market.
The changes aim to address the issue of financial misinformation spread by unregistered influencers by making it easier for legitimate advisors to register and operate.
The proposed relaxations provide more flexibility for individuals to practice as IAs and RAs, catering to different career paths and preferences.
The key proposed changes include:
Increase Participation: SEBI seeks to encourage more individuals to become registered IAs and RAs by easing eligibility requirements. This includes relaxing rules related to renewal of base certification, educational qualifications, minimum net worth, and minimum experience.
Allow Dual Registration: The regulator proposes allowing individuals to register as both an IA and RA simultaneously, which is currently not permitted.
Facilitate Part-Time IAs: SEBI aims to make it easier for individuals to register as part-time IAs, providing more flexibility for those who may not want to practice full-time.
Combat Misinformation: The proposed changes also seek to address the issue of misinformation spread by financial influencers by strengthening regulations and encouraging more IAs to register through formal channels.
Fee Structure for RAs: SEBI has proposed a cap on fees that RAs can charge individual clients, with a maximum of ₹1.25 lakh per annum per family. This cap will not apply to institutional investors, QIBs, or accredited investors. Additionally, RAs may charge fees up to one month in advance with the client’s consent.
Overall, these proposed changes have been met with positive feedback from the industry, as they are expected to streamline the regulatory framework and promote a more vibrant and accessible financial advisory and research landscape in India.
SEBI has released a consultation paper detailing these proposed changes and has invited public comments. The final regulations will be implemented after considering the feedback received.