Ease of doing business – Interim arrangement for certified past performance of Investment Advisers and Research Analysts prior to operation of PaRRVA
Summary
SEBI establishes an interim arrangement allowing Investment Advisers and Research Analysts to share certified past performance data prior to the operationalization of PaRRVA. This communication is restricted to specific client requests on a one-to-one basis and requires certification by ICAI/ICMAI members along with mandatory disclaimers. Entities must enroll with PaRRVA within three months of its operationalization, and after two years, only PaRRVA-verified metrics will be permitted.
Text
IAs/RAs may provide past performance data certified by a member of ICAI/ICMAI to a client (including prospective client) only on specific request of such client;
Such past performance data shall be communicated to clients (including prospective clients) on a one-to-one basis and such past performance data shall not be made available to general public through public media/website of IA/RA or any other mode.
IAs/RAs who wish to communicate certified past performance data to clients (including prospective clients) must enrol with PaRRVA within three months of its operationalization, else such IAs/RAs will not be able to communicate certified past performance data to clients post three months from the date of operationalization of PaRRVA.
The applicable period for such past performance data shall be prior to the date of operationalization of PaRRVA. Accordingly, the performance for the period subsequent to the date of operationalisation of PaRRVA shall only be advertised or provided to client using risk and return metrics verified by PaRRVA.
Any communication of such past performance data shall be accompanied with the following disclaimer: “The performance data presented herein are not verified by Past Risk and Return Verification Agency (PaRRVA)...”
After two years from the date of operationalisation of PaRRVA, IAs/RAs will be permitted to communicate/display only PaRRVA verified risk and return metrics and will not be permitted to use past performance data related to the period prior to the date of operationalisation of PaRRVA, in any communication to clients (including prospective clients).
IAASB/RAASB is hereby directed to specify the templates in which the certified past performance data shall be communicated, within one month of the date of this Circular, in consultation with Industry Standard Forums for IAs and RAs and SEBI.
It may be noted that contravention of the provisions of this circular will make an entity liable for enforcement actions, including summary proceedings “under Regulation 30A.(1)( c) of SEBI(Intermediaries) Regulations, 2008...
This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992 and Regulation 30A of the SEBI (Intermediaries) Regulations, 2008...
Source: SecMarx — Ease of doing business – Interim arrangement for certified past performance of Investment Advisers and Research Analysts prior to operation of PaRRVA. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.