The Hindu Business Line : SEBI moots watchdog for investment advisors

Mumbai March 31 The Securities and Exchange Board of India (SEBI) is in favour of creating a private sector self-financing regulatory organisation (RO) as the first level regulator for investment advisors.

The RO should develop principle-based regulations with risk-based examinations and implement regulation of discrete market segments in phases, said a consultative paper from SEBI on investment advisors. An investment advisor is an individual or firm advising clients on investments. Currently SEBI does not register and regulate investment advisors as a separate class of intermediaries.

Currently, entities involved in investment advice but not covered by SEBI regulations are shops engaged in distribution of retail financial products, banks, certified financial planners, chartered accountants, tax consultants, etc. It also includes entities (not registered with SEBI) that render investment advice on publicly accessible media.

SEBI intends the RO to publish regulations defining the process for regulation and registration, entry and exit, reporting and market conduct.

It should also provide for regulations on advertising, performance reporting and presentation, disclosure of conduct, experience and conflicts, disclosure of services and fees, prices and commissions and fair dealing.

SEBI has invited public comments and suggestions on the issue of regulation of investment advisors.

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