In a guidance note to a non-individual RIA, SEBI said that RIAs cannot become sub broker and offer financial products of capital markets with embedded commission.
SEBI said even if RIA does not receive commission from such a partnership, they should not offer investment plans with embedded commission. SEBI said the RIAs would have to distribute direct plans of financial products of capital markets to all advisory clients.
This means, RIAs cannot become sub broker with a broker who does not offer execution in direct plans.
SEBI said that RIAs cannot receive consideration including any commission or referral fees directly or indirectly from advisory clients at group or family level.
This has come after Vansh Capital asked SEBI if they could offer execution services through a broker and not take any consideration from the main brokers for such a transaction.