Compliance will be monitored by SEBI-registered investment advisers, who will be supervised by a supervisory body
Sebi, the market regulator, released a system/framework for investment adviser administration and supervision on Friday.
Sebi may recognize anyone or a body corporate for the purpose of regulating investment advisers (IA) and delegate administration and supervision of IAs on terms and conditions established by it under the investment advisor rules.
The ‘Investment Adviser Administration and Supervisory Body (IAASB)' will be responsible for the administration and supervision of IAs if it is granted recognition under IA guidelines.
BSE Administration & Supervision Limited (BASL), a wholly-owned subsidiary of BSE Limited, has been granted IAASB (for 3 years from June 1, 2021) accreditation in this regard. In August, the Securities and Exchange Board of India (Sebi) agreed to establish a wholly-owned subsidiary of the stock exchange to administer and monitor IAs registered with the regulator.
According to the circular, the IAASB's tasks include supervising IAs both on and offsite, resolving client and IA grievances, taking administrative action such as issuing a warning and submitting to Sebi for enforcement action.
It will also be responsible for monitoring the actions of IAs by acquiring periodic reports, submitting these findings to Sebi, and maintaining an IA database. The IAASB's board will be chaired by a Public Interest Director, and the board will also need a director who will represent investors.
Sebi will remain to administer and monitor all registered IAs at the same time, and IAASB will be inspected on a regular basis. Sebi registered IAs are expected to guarantee compliance with IAASB membership as part of the provision of recognition.
Existing IAs must seek membership in IAASB within three months following Sebi's acceptance of IAASB in order to assure compliance with the IA requirements and maintain their registration.
All registered IAs will be required to submit periodic reports to the IAASB in accordance with the administration and supervisory body's requirements. Given the expanding number of investment advisers who are registered with the SEBI.
Existing IAs must seek membership in IAASB within three months following Sebi's acceptance of IAA SB in order to assure compliance with the IA requirements and maintain their registration.
All registered IAs will be required to submit periodic reports to the IAASB in accordance with the administration and supervisory body's requirements.
Sebi decided in August to recognize a wholly-owned subsidiary of the stock exchange to manage and monitor IAs registered with the regulator, owing to the expanding number of registered investment advisers.