Markets regulator Sebi on Friday came out with a framework for investment adviser administration and supervisory body.
Under the investment adviser rules, Sebi may recognize anybody or a body corporate for the purpose of regulating investment advisers (IA) and delegate administration and supervision of the IAs on terms and conditions specified by it.
Accordingly, an entity granted recognition under the IA rules will be designated as ‘Investment Adviser Administration and Supervisory Body (IAASB)’ and will be entrusted with the administration and supervision of IAs.
In this regard, BSE Administration & Supervision Limited (BASL), a wholly-owned subsidiary of BSE Limited, has been granted recognition as IAASB for a period of three years from June 1, 2021.
With regard to responsibilities of IAASB, Sebi said the body is required to supervise IAs, including both onsite and offsite, redress grievance of clients and IAs, take administrative action including issuing a warning and referring to Sebi for enforcement action, according to the circular.
In addition, it will have to monitor activities of IAs by obtaining periodical reports, submit such reports to Sebi and maintain a database of IAs. The board of the IAASB will be chaired by a Public Interest Director and the board need to have a director who will bring investor perspective.
Sebi will continue to concurrently administer and supervise all registered IAs and IAASB will be subject to periodic inspection by it. Pursuant to grant of recognition, Sebi registered IAs are required to ensure compliance with the membership of IAASB.
In order to ensure compliance with the IA rules and to keep their registration in force, existing IAs will have to seek membership of IAASB within three months of the recognition of IAASB by Sebi.
All registered IAs will have to submit periodic reports to IAASB in a manner specified by the administration and supervision body. Considering the growing number of registered investment advisers, Sebi in August decided to recognize a wholly-owned subsidiary of the stock exchange to administer and supervise IAs registered with the regulator.
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