Recognition and operationalization of Past Risk and Return Verification Agency (PaRRVA)
Summary
This circular establishes the framework for recognizing Credit Rating Agencies as Past Risk and Return Verification Agencies (PaRRVA) to verify risk-return metrics. It outlines specific eligibility criteria for both PaRVVAs and their associated Stock Exchange Data Centres (PDC). The document details the two-stage recognition process, pilot operationalization, and distinct roles for verification entities. This section outlines the operational framework for risk-return metric verification, including roles of PDC and PaRRVA, record-keeping mandates, and data sharing obligations. It establishes guidelines for the presentation of verified metrics, required disclaimers, and the constitution of an oversight committee to monitor activities. Finally, it details dispute resolution mechanisms, enforcement powers, and consequential amendments to Master Circulars for Investment Advisers and Research Analysts. Paragraphs 42-43 amend the Master Circular for Stock Brokers to permit references to algorithmic trading returns if verified by PaRRVA. Annexure A outlines the verification process where PDC acts as an agent for PaRRVA to store, verify, and display risk-return metrics. Annexure B establish
Text
Regulation 16D and 16E of the Intermediaries Regulations provide for verification of risk and return metrics by a Past Risk and Return Verification Agency (PaRRVA).
A CRA may be recognized as a PaRRVA in terms of Regulation 12A of the CRA Regulations read with Regulation 16E of the Intermediaries Regulations.
PaRRVA-PDC shall have principal and agent relationship wherein PaRRVA will avail the services of PDC for verification of risk-return metrics.
Number of years of existence of the CRA should be minimum 15 years.
Minimum net worth of the CRA should be INR 100 crores.
Number of issuers which have obtained ratings of listed or proposed to be listed debt securities from the CRA should be 250 or more.
CRA should have Investor grievance redressal mechanism including Online Dispute Resolution (ODR) Mechanism.
Number of years of existence of the SE should be minimum 15 years.
Minimum net worth of the SE should be INR 200 crores.
The SE should have nation-wide terminals.
SE should have Investor grievance redressal mechanism including Online Dispute Resolution (ODR) Mechanism.
SEBI shall call for application for interest from all SEBI registered CRAs.
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Source: SecMarx — Recognition and operationalization of Past Risk and Return Verification Agency (PaRRVA). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.