New Delhi: Sebi's Latest Move to Protect Investors

In a significant step towards bolstering investor protection and ensuring market transparency, the Securities and Exchange Board of India (Sebi) has issued detailed guidelines for research analysts and investment advisors. This initiative follows the notification of the Research Analyst (RA) rules and Investment Advisor (IA) norms in December last year.

Key Highlights of the New Guidelines

The new framework introduces qualification standards, fee structures, deposit requirements, and client segregation protocols. A notable feature is the requirement for research analysts to maintain a deposit based on their client base, ranging from Rs 1 lakh for up to 150 clients to Rs 10 lakh for over 1,000 clients. Investment advisors are also required to follow a graded deposit system tied to client numbers.

Compliance and AI Usage

Sebi has introduced fresh compliance mandates, particularly for entities utilizing artificial intelligence (AI) tools in their services. Entities must disclose the extent of AI usage in their offerings and ensure data security and compliance with applicable rules. Both RAs and IAs are required to undertake annual compliance audits and submit reports to their respective supervisory bodies.

Dual Registrations and Part-Time Advisors

The markets watchdog has permitted individuals and entities to hold dual registrations as RAs and IAs, provided their advisory and research services are distinctly segregated. The guidelines also introduce provisions for part-time RAs and IAs, allowing professionals like teachers, architects, and lawyers to register, provided their primary occupations do not conflict with the market rules.