SEBI Introduces Part-Time Provisions For Investment Advisors, Research Analysts
Apart from this, SEBI has also put substance on the role of principal officers for non-individual advisers.
The markets regulator on Tuesday notified changes for investment advisors and research analysts. The amendments were published on Dec. 16 in the gazette and aim to enhance regulatory clarity.
SEBI's Changes For Investment Advisors
The Securities and Exchange Board of India's amendments for investment advisors omit the term 'investment products' in several definitions to better clarify the scope of services provided by investment advisers. Importantly, the regulations now exclude 'trading calls' from being categorised as investment advice.
The regulator has also brought in the concept of a "part-time investment adviser". Such advisers can engage in other businesses or employment, provided these activities are unrelated to handling client funds or offering investment recommendations. Additionally, the number of clients that part-time investment advisers can serve has been capped at 75 clients.
SEBI now requires all individuals offering investment advice, including those associated with investment advisers, to hold at least a graduate degree. A valid certification, such as one from the National Institute of Securities Markets, is mandatory for compliance.
Advisers must renew their NISM certification before expiry to maintain eligibility.
The regulator has also put substance on the role of principal officers for non-individual advisers. These officers will oversee advisory operations, with specific compliance responsibilities assigned.
Additionally, SEBI now mandates advisers to maintain a deposit with a scheduled bank, marked as a lien in favour of a body recognised for supervising investment advisers. This deposit will serve as a safeguard in arbitration or dispute resolution proceedings.
SEBI has further clarified that investment advisers using artificial intelligence tools for client servicing will bear sole responsibility for the integrity and confidentiality of client data, as well as for compliance with all applicable laws.
Changes For Research Analysts
The changes for research analysts introduce parallel refinements for the professionals.
Key additions include definitions of terms such as part-time research analyst, who may engage in additional business activities unrelated to securities. The amendments also define “family of clients” and “family of research analysts” to expand oversight over related-party activities.
The amendments have also brought in a role of a principal officer for non-individual research entities. Similar to investment advisers, these officers will oversee research operations.
To bolster transparency, SEBI has clarified that consideration includes any form of economic benefit—cash or non-cash—received directly or indirectly for research services. This change ensures that compensation structures are properly disclosed and monitored.
