New Delhi New Delhi. Markets regulator Sebi on Wednesday said it has issued guidelines on regulatory framework for research analysts and investment advisors to enhance investor protection and ensure transparency. These guidelines come after the regulator notified Research Analyst (RA) rules and Investment Advisor (IA) norms in December last year. The new norms include eligibility standards, fee structure, deposit requirements and client separation protocols. The regulator introduced new compliance mandates especially for entities using artificial intelligence (AI) tools in their services.
Under the revised framework, Sebi said research analysts are required to maintain deposits depending on their client base, ranging from Rs 1 lakh for 150 clients to Rs 10 lakh for more than 1,000 clients. The purpose of these deposits is to provide additional protection to investors. Also, investment advisors are mandated to follow a graded deposit system linked to client number. Existing IAs will have to comply with the deposit requirements by June 30, 2025, while new applicants will have to comply with them immediately. Similarly, all research analysts will have to meet the deposit requirements by April 30, 2025, Sebi said in two separate circulars.
Additionally, the market regulator has permitted individuals and entities to hold dual registration as RAs and IAs, provided their advisory and research services are separate. SEBI said such entities should follow separate compliance framework for each function. Both RAs and IAs are required to ensure client-level separation to prevent conflict of interest. Clients receiving advisory services from an institution may not access delivery services within the same group and vice versa.
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