Framework for administration and supervision of Research Analysts and Investment Advisers
Summary
This circular establishes a framework where recognized stock exchanges act as Administration and Supervisory Bodies (RAASB/IAASB) for Research Analysts and Investment Advisers. It outlines the eligibility criteria for stock exchanges, including minimum net worth and infrastructure requirements, to assume these supervisory roles. The document details the division of responsibilities between SEBI and the RAASB/IAASB, with SEBI retaining core registration and enforcement powers while the bodies handle initial scrutiny. This section outlines the operational framework for Recognized Association of Stock Brokers (RAASB) and Independent Analysts Self-Regulatory Body (IAASB), including their supervision, enforcement, and grievance redressal duties. It details the transition from 'membership' to 'enlistment' for Registered Advisors and Independent Analysts, providing specific provisions for existing entities and new applicants. The document further establishes efficiency measures, such as consolidating RAASB and IAASB functions within a single stock exchange, and mandates periodic reporting and SEBI monitoring.
Text
Stock Exchange shall now be recognised as RAASB and IAASB under Regulation 14 of the ‘RA Regulations’ and ‘IA Regulations’ for administration and supervision of Research Analysts (‘RAs’) and Investment Advisers (‘IAs’) respectively.
An applicant seeking registration as RA and IA is required to be enlisted with RAASB and IAASB respectively.
From the effective date of this circular, the existing framework for administration and supervision of IAs as specified through SEBI circular number SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 dated June 18, 2021 and subsequently incorporated under the head “Administration and Supervision of Investment Advisers” of Master Circular for Investment Advisers numbered SEBI/HO/MIRSD-PoD-2/P/CIR/2023/89 dated June 15, 2023 stands rescinded.
Notwithstanding the aforesaid rescission, any action taken or purported to have been taken or any action that may be taken against any person in relation to the membership of IAASB recognised under regulation 14 of IA Regulations, as applicable in the rescinded framework of IAASB, shall be deemed to have been done or taken or may be taken under the corresponding provisions of the amended IA Regulations.
To begin with, in order to ensure efficiency in the system and economies of scale, RAASB and IAASB shall be one and the same stock exchange.
This circular shall become effective on July 25, 2024 (ninetieth day from the date of publication in the Official Gazette of the amendments to RA Regulations made vide the SEBI (Research Analysts) (Amendment) Regulations, 2024 and the amendments to IA Regulations made vide the SEBI (Investment Advisers) (Amendment) Regulations, 2024).
Minimum number of years of existence as recognised stock exchange: 15 years;
Minimum net worth of recognised stock exchange: INR 200 crores;
Investor grievance redressal mechanism including Online Dispute Resolution Mechanism;
Stock exchange having ISCs in at least 20 cities.
The stock exchange recognised as RAASB/IAASB shall include in its Memorandum of Association, Articles of Association and bye-laws, requisite provisions to fulfil the role and responsibilities specified in para 3 below.
The stock exchange recognised as RAASB/IAASB shall maintain necessary infrastructure like adequate office space, equipment and manpower to effectively discharge the responsibilities of RAASB/ IAASB.
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Source: SecMarx — Framework for administration and supervision of Research Analysts and Investment Advisers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.