Investment Advisors to be registered with Self-regulatory Organisation (SRO) as per SEBI’s Rule

The Securities and Exchange Board of India (SEBI) proposed new rules for investment advisors under which the advisors would be required to be registered with a self-regulatory organisation (SRO) before undertaking such a role (role of an advisor). The proposed framework was proposed with an objective to regulate investment advisory services in various forms, including independent financial advisors, banks, distributors and fund managers.

While the activity of giving investment advice will be regulated under the proposed framework through an SRO, issues relating to financial products other than securities will come under the jurisdiction of the respective sector regulators.

Persons or entities seeking registration as investment advisors shall have to obtain it from the SRO. The SRO formed to regulate investment advisors will be registered under the SEBI (Self Regulatory Organisation) Regulations, 2004.

The duties of the SRO will include registering and setting minimum professional standards, including certification of investment advisors, laying down rules and regulations and enforcing those, informing and educating the investing public, setting up and administering a disputes resolution forum for investors and registered entities.

Those entities registered with the SRO will provide advice on investments in financial products or products that are traded and settled like financial products.

The services will include financial advice, financial planning service and actions which would influence an investment decision.