SEBI/HO/MIRSD/MIRSD-SEC-3/P/CIR/2024/34 May 02, 2024
All Registered Investment Advisers
All Registered Research Analysts
All Recognised Stock Exchanges
Dear Sir/Madam,
Subject: Framework for administration and supervision of Research Analysts
and Investment Advisers
Background
1. In terms of Regulation 38A of the ‘SECC Regulations’1 notified on April 26, 2024,
a recognised Stock Exchange may undertake the activities of administration and
supervision over specified intermediaries on such terms and conditions and to such
an extent as may be specified. Accordingly, Stock Exchange shall now be
recognised as RAASB2 and IAASB3 under Regulation 14 of the ‘RA Regulations’4
and ‘IA Regulations’5 for administration and supervision of Research Analysts
(‘RAs’) and Investment Advisers (‘IAs’) respectively. The detailed framework for
RAASB and IAASB is specified in Annexure I.
2. As per clause (xi) of Regulation 6 of RA Regulations and clause (n) of Regulation
6 of IA Regulations, an applicant seeking registration as RA and IA is required to
be enlisted with RAASB and IAASB respectively. The provisions governing
enlistment including enlistment of existing RAs/IAs and of applicants whose
registration applications are under process as on the effective date of this circular
are specified in the enclosed framework.
1 SECC Regulations- Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)
Regulations, 2018
2 RAASB- Research Analyst Administration and Supervisory Body
3 IAASB- Investment Adviser Administration and Supervisory Body
4 RA Regulations- SEBI (Research Analysts) Regulations, 2014
5 IA Regulations- SEBI (Investment Advisers) Regulations, 2013
Page 1 of 8
Repeal and Savings with respect to the erstwhile IAASB framework
3. From the effective date of this circular, the existing framework for administration
and supervision of IAs as specified through SEBI circular number
SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 dated June 18, 2021 and
subsequently incorporated under the head “Administration and Supervision of
Investment Advisers” of Master Circular for Investment Advisers numbered
SEBI/HO/MIRSD-PoD-2/P/CIR/2023/89 dated June 15, 2023 stands rescinded.
4. In terms of regulation 30A of IA Regulations, notwithstanding the aforesaid
rescission, any action taken or purported to have been taken or any action that
may be taken against any person in relation to the membership of IAASB
recognised under regulation 14 of IA Regulations, as applicable in the rescinded
framework of IAASB, shall be deemed to have been done or taken or may be taken
under the corresponding provisions of the amended IA Regulations.
Operationalization of RAASB and IAASB framework
5. Based on fulfillment of the criteria specified in Annexure I to this circular, a stock
exchange shall be granted recognition as RAASB and IAASB. To begin with, in
order to ensure efficiency in the system and economies of scale, RAASB and
IAASB shall be one and the same stock exchange.
Timeline for implementation
6. This circular shall become effective on July 25, 2024 (ninetieth day from the date
of publication in the Official Gazette of the amendments to RA Regulations made
vide the SEBI (Research Analysts) (Amendment) Regulations, 2024 and the
amendments to IA Regulations made vide the SEBI (Investment Advisers)
(Amendment) Regulations, 2024).
7. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with regulation 14 of RA
Regulations and IA Regulations to protect the interests of investors in securities
market and to promote the development of, and to regulate the securities market.
Page 2 of 8
8. This circular is available on SEBI website at www.sebi.gov.in under the categories
"Legal > Circulars", “Info For > Investment Advisers” and “Info For > Research
Analysts”.
Yours faithfully,
Amrita Shukla
Deputy General Manager
+91-22-26449882
E-mail: amrita@sebi.gov.in
Annexure I – Detailed framework for RAASB and IAASB
Page 3 of 8
Annexure I
Detailed framework for RAASB and IAASB
1. Criteria for grant of recognition as RAASB and IAASB:
1.1. The recognition of a recognised stock exchange as RAASB and IAASB under
regulation 14 of RA Regulations and IA Regulations respectively shall be
based on the following eligibility criteria:
(i) Minimum number of years of existence as recognised stock exchange: 15
years;
(ii) Minimum net worth of recognised stock exchange: INR 200 crores;
(iii) Stock exchange having nation-wide terminals;
(iv) Investor grievance redressal mechanism including Online Dispute
Resolution Mechanism;
(v) Capacity for investor service management gauged through reach of
Investor Service Centers (ISCs): Stock exchange having ISCs in at least
20 cities.
2. Setting up of requisite systems by stock exchange recognised as RAASB/
IAASB:
2.1. The stock exchange recognised as RAASB/IAASB shall include in its
Memorandum of Association, Articles of Association and bye-laws, requisite
provisions to fulfil the role and responsibilities specified in para 3 below.
2.2. The stock exchange recognised as RAASB/IAASB shall maintain necessary
infrastructure like adequate office space, equipment and manpower to
effectively discharge the responsibilities of RAASB/ IAASB. Infrastructure may
be shared with other group entities where required.
2.3. The stock exchange recognised as RAASB/IAASB shall put in place systems/
processes for maintaining database of RAs/IAs, sharing of information with
SEBI and discharging the responsibilities of RAASB/ IAASB.
2.4. RAASB and IAASB shall constitute an internal committee to oversee the
activities of administration and supervision of RAs and IAs. The committee
Page 4 of 8
shall periodically review the performance of the stock exchange as RAASB/
IAASB and make recommendations to SEBI. The constitution of the committee
shall be as follows:
(i) Public Interest Directors shall form the majority of the committee;
(ii) A maximum of two key management personnel of the stock exchange can
be on the committee;
(iii) The committee shall also include independent external persons
representing RAs, IAs and proxy advisors, with minimum one
representative for each segment.
3. Responsibilities of SEBI and RAASB/ IAASB:
3.1. The core functions relating to registration, enforcement action and disciplinary
or penal action shall remain with SEBI and SEBI shall continue to register IAs
and RAs as per the mandate given under the Securities and Exchange Board
of India Act, 1992. The following functions as specified in the table below shall
be performed concurrently by SEBI and RAASB or IAASB, as the case may
be.
SEBI Proposed RAASB/IAASB
1. Approval of registration Activities pertaining to administration:
applications of RAs/IAs 1. Initial scrutiny of registration applications for ensuring
– fresh registration as completeness of submission of information/
well as application documents along with recommendation on the
made pursuant to applications to SEBI
change in control 2. Initial scrutiny of post-registration applications
2. Approval for post- illustrated below for ensuring completeness of
registration submission of information/ documents along with
applications such as – recommendation on the applications to SEBI:
a. Change of name a. Change of name
b. Change of address b. Change of address
c. Change of c. Change of compliance officer/ principal officer/
compliance officer/ director/ associated person, contact details, etc.
principal officer/ d. Change in shareholding
director/ associated e. Merger/amalgamation/takeover/change in control
of RA/IA
Page 5 of 8
SEBI Proposed RAASB/IAASB
person, contact f. Surrender of registration
details, etc. g. NOC for establishing wholly owned subsidiary/
d. Change in joint venture in foreign jurisdiction, etc.
shareholding 3. Approval of advertisements of RAs/IAs as per
e. Merger/ Advertisement Code issued by SEBI
amalgamation/ 4. Maintenance of database of RAs/IAs
takeover/ change in 5. Enlisting RAs/IAs in the proposed RAASB/IAASB
control of RA/IA 6. Issuance of circulars/instructions/standard operating
f. Surrender of procedures, etc. to RAs/IAs for implementation of
registration provisions of SEBI regulations/ circulars
g. NOC for establishing 7. Submission of periodical reports to SEBI
wholly owned 8. Collection and administration of fees.
subsidiary/ joint Activities pertaining to supervision:
venture in foreign 9. Monitoring the activities of RAs/IAs by obtaining
jurisdiction, etc. Annual Compliance Audit Report and other
3. Supervision of RAs/IAs periodic/ad-hoc reports covering general details of
4. Taking enforcement RAs/IAs, details of customer complaints, details of
action suo moto or clients, etc.
otherwise 10. Monitoring compliance of regulations/ circulars by
5. Taking disciplinary/ Ras/IAs
penal action including 11. Grievance redressal and Arbitration/ Online Dispute
levying penalty on Resolution (ODR)
recommendation of 12. Taking administrative action including imposition of
proposed body penalties and issuing warning/caution letter
6. Grievance redressal 13. Referring to SEBI for enforcement action against
RAs/IAs.
In addition to the above, the recognised RAASB/IAASB
may be assigned with on-site/offsite inspection of
RAs/IAs, to be done on behalf of/concurrently with SEBI
and any other activity as may be specified by SEBI.
4. Enlistment of RAs/IAs with RAASB/IAASB:
4.1. Amendments have been made to RA/IA Regulations to provide for ‘enlistment’
of RAs/IAs with RAASB/IAASB in place of the earlier provision of
‘membership’ of RAs/IAs with RAASB/IAASB. Under the amended
Page 6 of 8
regulations, an applicant seeking registration as RA./IA shall be required to
‘enlist’ with RAASB/IAASB.
4.2. Further, in order to provide ease of doing business and to ensure smooth
operationalization of RAASB and IAASB framework and to prevent disruption
for existing RAs and IAs registered with SEBI, the following has been provided
for:
(i) Existing RAs registered with SEBI shall be deemed to be enlisted with
RAASB. Existing IAs registered with SEBI who are also members of
BASL6 shall be deemed to be enlisted with the IAASB recognised under
this framework.
(ii) Applications for registration as RA received and under process with SEBI
up to the effective date of operationalization of RAASB framework shall
continue to be processed by SEBI. Such RAs shall be deemed to be
enlisted with RAASB once registration is granted by SEBI.
(iii) Applications for registration as IA pending with SEBI/BASL at the time of
operationalization of IAASB framework shall continue to be processed by
SEBI/BASL. Once registration is granted by SEBI, such IAs shall be
deemed to be enlisted with the IAASB recognised under this framework.
(iv) New applications received from the effective date of operationalization of
RAASB/IAASB framework shall be routed through RAASB/IAASB. In such
cases, enlistment with RAASB/ IAASB shall be a pre-requisite for grant of
certificate of registration as RA/ IA by SEBI.
(v) With reference to the RAs/IAs/applicants referred in point (i) to (iii) above,
it is clarified that no additional documentation shall be required to be
submitted by such RAs/IAs/applicants for enlistment with RAASB or
IAASB as the case may be.
5. Repeal and Savings with respect to erstwhile IAASB framework
6 BASL- BSE Administration and Supervision Limited (“BASL”) which is currently recognized as
IAASB
Page 7 of 8
5.1 Any action taken or purported to have been taken or any action that may be
taken against any person in relation to the membership of IAASB recognised
under regulation 14 of IA Regulations shall be deemed to have been done or
taken or may be taken under the corresponding provisions of the amended IA
regulations.
6. Measures for promoting efficiency
6.1 To begin with, in order to ensure efficiency in the system and economies of
scale, RAASB and IAASB shall be one and the same stock exchange.
6.2 In cases where a person has registration as both RA as well as IA, in the
interest of efficiency, a single window clearance of various approvals shall be
adopted. Details in this regard shall be specified by the recognised RAASB
and IAASB.
7. Submission of Periodic Reports
7.1 Pursuant to operationalization of RAASB/ IAASB framework, all registered
RAs/ IAs shall submit periodic reports to RAASB/ IAASB in the manner
specified by SEBI.
8. Monitoring of RAASB/IAASB
8.1 SEBI shall monitor RAASB and IAASB through periodical reports and
inspection regarding administration and supervision of RAs and IAs.
****
Page 8 of 8