The Securities and Exchange Board of India (Sebi) revamped the regulatory framework for investment advisers and research analysts, easing their registration requirements and reducing their net worth requirement.
Sebi proposes to get rid of post-graduation requirements for IAs and RAs and ease base certification requirements. Read on to learn new eligibility criteria.
The Securities and Exchange Board of India (Sebi) revamped the regulatory framework for investment advisers and research analysts, easing their registration requirements and reducing their net worth requirement.
Sebi relaxed the eligibility criteria for IAs and RAs on minimum qualification, certification, experience and net worth.
Sebi felt that the number of investment advisers (IAs) and research analysts (RAs) today does not match the size of the investor base, adding that the ratio of investment advisers per million people is much lower compared to the United States. This led to a rise in unregistered entities posing as IAs and RAs, Sebi said.
An IA offers investment advice related to securities and investment products, while an RA can give security-specific recommendations to clients. of individual investors.
To attract young minds towards the profession the market regulator feels the minimum qualification requirements ought to be relaxed.
Now a post-graduation will only be necessary as per the proposal from the earlier requirement of a graduate degree.
For an individual IA/RA, a graduate degree, PG degree/ diploma in specific disciplines, professional qualification, PG program from NISM, or a CFA Charter from the CFA Institute will be the required eligibility. Specific educational disciplines include finance, accountancy, business management and economics.
Currently, IAs and RAs are required to obtain the prescribed certifications from NISM which are base certifications at the time of registration. They are required to obtain the same base certifications before the expiry of the validity of such certifications. From now on IAs and RAs would be required to obtain the base certifications only initially at the time of registration. "IAs and RAs have been raising concerns that the requirement to obtain the same base certification afresh every time, to keep their registration in force, creates an uncertainty of business continuity," Sebi said in the consultation paper.
Sebi also plans to eliminate the experience requirement for registration as an investment adviser and the minimum net worth requirement. "Instead, it is proposed that IAs/RAs shall maintain a deposit for such a sum as may be specified by SEBI from time to time. Such deposit shall be lien marked to the stock exchange as IAASB/RAASB for utilisation towards dues emanating out of arbitration and conciliation proceedings," Sebi said.
The amount of deposits depends on the number of clients and revenue. RAs with up to 150 clients require only Rs 1 lakh. For clients ranging from 150 to 300, the deposit is Rs 2 lakh, and for clients above 1,000, it is Rs 10 lakh.