SEBI releases further guidelines for investment advisors on client segregation,fees and record-keeping
Markets regulator Sebi has come out with detailed guidelines for investment advisers asking them to ensure segregation of advisory and distribution activities at the client level.
Besides, Sebi has fixed a cap on fee that investment advisers (IA) can charge from clients. It has also put in place a procedural framework pertaining to audit and record-keeping.
Under the rules, an individual IA will apply for registration as non-individual investment adviser on onboarding 150 clients and IA will have to enter into an investment advisory agreement with its clients.
In a circular on Wednesday, the regulator said investment advisers will have to ensure compliance with regard to client-level segregation of advisory and distribution activities.
To ensure client-level segregation at the IA’s group level, Sebi said existing clients who wish to take advisory services will not be eligible for availing distribution services within the group/family of IA, and vice versa for those availing advisory services.
It further said a new client will be eligible to avail either advisory or distribution services within the group or family of the investment advisers and this option needs to be made available at the time of boarding.
However, in case where a dispute has been raised, such records will be kept till its resolution or if Sebi desires that specific records be preserved, then such records will be kept till further intimation from the regulator.
The deadline for compliance for these guidelines ranges from January 1, 2021 to April 1, 2021, the Securities and Exchange Board of India (Sebi) noted.
Sebi had floated a consultation paper on investment advisers in January and after considering the inputs from public notified the norms in this regard in July and these amended norms will come into force on September 30.
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