Sebi Eases Regulatory Hurdles for Investment Advisors and Research Analysts

The Securities and Exchange Board of India (Sebi) has introduced significant changes to the regulatory framework governing investment advisers (IAs) and research analysts (RAs). These modifications aim to streamline business operations by simplifying registration criteria and compliance protocols.

Key updates include reducing educational prerequisites to a graduate degree in specified disciplines and replacing net-worth requirements with deposit mandates. Sebi has also established categories for 'part-time investment advisor' and 'part-time research analyst' while revising the scope of investment advice/research service to exclude trading recommendations.

The revised framework now permits graduates to become certified IA/RA, representing a significant reduction in qualification requirements for individuals in advisory or research roles. Additionally, advisers and research analysts must maintain bank deposits with scheduled institutions, marked in favour of recognised oversight bodies, serving as security for potential arbitration or dispute resolution cases.

For practitioners utilising Artificial Intelligence tools, Sebi stipulates complete responsibility for data security, confidentiality, information integrity, advice generation, and legal compliance, regardless of implementation scale. A dedicated registration form has been introduced for part-time investment advisers, with individual advisers serving over 300 clients or earning above Rs 3 crore annually required to convert to non-individual registration within three months. Part-time advisers face a restriction of 75 maximum clients, and non-individual investment advisory firms must employ a compliance officer to ensure regulatory adherence.