SEBI Notifies Segregation Of Advisory, Distributorship Roles For RIAs

The market watchdog Securities and Exchange Board of India (Sebi) has provided for amendments to the regulatory framework for RIAs or registered investment advisors. And upon updation in the official gazette, the changes will come into effect.

As per the new norms, there will be a mandatory and clear segregation of advisory and distributorship role, for avoiding conflict of interest.

In case of advisors that work at a corporate or organisation level, the client level segregation norm needs to be complied with at the group level. Such entities can offer advisory services through a distinctly linked department.

Also they will be allowed to offer executive services via direct products or schemes in the securities market. "However, no consideration may be received directly or indirectly, at the investment advisor's group or family level, for such services," Sebi said.

Additionally, the augmented eligibility norms for RIAs will come into effect, which for individual advisors require a minimum net worth of Rs. 5 lakh, while in case of non-individual advisors it is at Rs. 50 lakh.

Also new professionals in the field would need to have an enhanced professional or PG qualification in applicable subjects together with a relevant experience of 5 years.

Nonetheless for existing RIAs, the watchdog has allowed grandfathering in this clause.
RIAs with a clientele of more than 150 need to apply as a non-individual investment advisor.

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