Administration and Supervision of Investment Advisers By CS Megha Kyal

SEBI Circular dated August 06, 2020

Since the time SEBI IA regulations, 2013 has been notified, SEBI has been floating various consultation papers proposing various policy changes. We have already seen the amendments notified by SEBI vide SEBI (INVESTMENT ADVISERS) (AMENDMENT) REGULATIONS, 2020 in the month of July.

SEBI had earlier in April 01, 2019, floated a consultation paper to seek comments on self-regulatory organizations (SROs) in securities market. The consultation paper was primarily with a motive to have SRO(s) to regulate the Distributors of MF products and Investment Advisers (IA’s), given increasing number of intermediaries in these two areas.

Vide circular dated August 06, 2020; SEBI has invited all Recognised Stock Exchanges to submit their proposal for Administration and Supervision of Investment Advisers. It is decided to recognize a wholly-owned subsidiary of the stock exchange (stock exchange subsidiary) to administer and supervise IA’s registered with SEBI.

I would not waste much of your time in explaining the eligibility criteria and required infrastructure for selection. More importantly, the list of responsibilities assigned to selected entity, as listed below, is to be taken into consideration:

  • Supervision of IA’s including both on-site and offsite
  • Grievance redressal of clients and IA’s
  • Administrative action including issuing warning and referring to SEBI for enforcement action
  • Monitoring activities of IA’s by obtaining periodical reports
  • Submission of periodical reports to SEBI
  • Maintenance of database of IA’s
The introduction of first level regulator would change the regulatory landscape for IA’s. Till now IA’s were not required to submit any information with respect to their operations with SEBI. Now that the administration and supervision of IA’s would be through a separate entity all together, the compliance with provisions of IA regulations would become all the more important. For now, we can only speculate the outcome of this move, only time would tell the real implication of such move by SEBI.

We are expecting few circulars/ guidelines from SEBI on the amendments to be applicable from September 30, 2020 by next months. We would update you on the same with our analysis as and when the same is available.

For any query or compliance assistance you can connect to

Click here to read the disclaimer

Write a Comment