SEBI has approved the formation of a self-regulatory body for registered investment advisors (RIAs). This SEBI recognized body will be responsible for administration and supervision of RIAs under IA Regulations.
"The Board approved amendment to SEBI (Investment Advisers) Regulations, 2013 (IA Regulations) requiring Investment Advisers (IA) to seek membership of a body recognized by SEBI for administration and supervision of IAs under IA Regulations," SEBI said in a press release today.
In April 2019, SEBI had released a consultation paper on Self Regulatory Organisations (SROs) for intermediaries including investment advisors.
Currently, SEBI directly regulates RIAs. SEBI felt the need of having an SRO for RIAs due to their growing numbers. “Their direct supervision by SEBI would be challenging. Hence, some form of a first level regulator is required to have an oversight on them. In view of the above, it is proposed to have SROs to regulate RIAs,” SEBI had stated in the 2019 consultation paper.
The consultation paper allowed either a body of intermediaries or a subsidiary of a stock exchange to play this role. And in August this year, SEBI had allowed stock exchanges to propose a subsidiary to regulate investment advisors.
The recent press release also said there is a modification to the structure of fees payable by RIAs, while the total cost borne by RIAs towards fees remains the same.
"The Board also approved modification to the structure of fees payable by RIAs, while ensuring that the total cost borne by RIAs towards fees remains same as that payable by RIAs under the present RIA Regulations," the press release noted.
Currently individuals RIAs pay Rs 10,000 every 5 years, while corporate RIAs pay Rs 5 lakh every 5 years to SEBI. The recent release did not specify what will be the change in the structure of fees.
