SEBI introduces amendments for investment advisors and research analysts

Mumbai

The Securities and Exchange Board of India (SEBI) has introduced significant amendments to its regulations for investment advisors and research analysts to enhance clarity and accountability. Notably, the term “investment products” has been removed from several definitions to better outline the scope of services. Importantly, “trading calls” are no longer classified as investment advice. A new category of "part-time investment advisers” has been introduced, allowing them to engage in other businesses, provided these do not involve client funds or investment recommendations. However, the number of clients a part-time adviser can serve is capped at 75. Additionally, all investment advisers must hold a graduate degree and possess a valid certification from the National Institute of Securities Markets (NISM). They are also required to renew their certification before it expires. SEBI has also focused on strengthening compliance for non-individual advisers, requiring them to appoint a principal officer responsible for advisory operations and compliance. Furthermore, advisers must maintain a deposit with a scheduled bank for arbitration or dispute resolution proceedings. For research analysts, SEBI has introduced similar changes, including the definition of “part-time research analyst” and the role of a principal officer for non-individual entities. The amendments also mandate transparency in compensation structures and related-party activities. SEBI is also considering a platform to track inactive and unclaimed mutual fund folios.