35% of investment advisors still not registered, says SEBI Chairperson
Mumbai, October 4, 2023
Despite a simple registration process, around 35 per cent of investment advisers are still not registered with the regulator, Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch on Wednesday.
She sought industry associations’ help in getting more advisers to get registered with the regulator.
“We require investment advisors to register…There are a large number, some 35 per cent of investment advisors, still not registered,” Buch said at an event organised by the Association of Registered Investment Advisers (ARIA).
“…It’s your profession, it is your livelihood, and in all this time, forget other compliances, you have not found time or inclination to come and register,” the SEBI Chairperson said.
As per the SEBI website, there are 1,314 registered investment advisers. However, to operate as registered investment advisers (RIAs), these entities have to register with BSE Administration and Supervision Ltd (BASL), a wholly owned subsidiary of BSE, which has been granted approval from SEBI for administration and supervision of Investment Advisers (IAs). At present, there are around 900 BASL registered members.
Buch asked ARIA to encourage more numbers of investment advisors to become registered entities.
“You (industry associations) are there all over the country. You have presence and people who care about the (investment adviser) community and who spend their time, effort and energy actually working for the community. We really need your assistance starting from something as simple as getting registered,” she said.
The capital markets regulator has been tightening the noose on unregistered and unauthorized investment advisers, including financial influencers, also known as finfluencers, who provide stock specific tips or advice on various social media platforms such as YouTube, Telegram, Facebook, Instagram and X (formerly Twitter).
Finance Minister Nirmala Sitharaman had also asked people to exercise caution while following the advice of finfluencers.
The regulator is working on guidelines for finfluencers, and has announced guidelines to stop misleading advertising by investment advisers (IA) and research analysts (RA). In August this year, SEBI floated a consultation paper proposing a set of measures to restrict the association of regulated entities or intermediaries with unregistered finfluencers.
Buch said that industry associations should be more proactive in informing the regulator about the malpractices in the market. According to her, regulations can’t be made sitting in some ivory tower and the regulator needs to be in touch with the market. The only way for this is through feedback from industry associations and their members.
“We need good guys to come and tell us what are the malpractices in the market. We want them to help us craft solutions to address those so that good guys win. We want a million investment advisors,” SEBI chairperson said.
She said in order to validate claims of performance made by registered investment advisers, the regulator has come out with a consultation paper on the creation of a Performance Validation Agency (PVA).
“There will be an institutional mechanism where you (investment advisers) come to validate claims, and then you can make that claim,” Buch said.
She further said that SEBI is open to a segmented approach while formulating regulations for different segments.
“If there are distinct segments in the market then they must be regulated differently. Therefore, we are completely open and willing to look at a segmented approach to regulation,” SEBI Chairperson said.
The regulator has the ability to do supervision and compliance monitoring at a segmented level, she added.
[The Indian Express]
