SEBI introduces client level segregation for RIAs

By Ravi Samalad |  17-02-20 | 
 
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About the Author
Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

In its board meeting held today in Mumbai, Securities and Exchange Board  Board of India (SEBI) has given green signal to some of the proposals outlined in the fourth consultation paper on Registered Investment Advisers (RIAs).

Here are some of the key decisions taken at the board meeting today:

  • To avoid any conflict of interest, there will be client level segregation between advisory and distribution services. Further, individual RIAs can’t offer distribution services to their clients.
  • RIAs can provide execution services in securities markets through direct plans.
  • To bring transparency, RIAs will need to have an agreement with clients detailing the terms and conditions.
  • There will be more clarity on payment of fee and an upper cap on fee.
  • There will be enhanced eligibility criteria like qualification, net worth and grandfathering existing RIAs from enhanced qualification and experience for registering as RIA.
  • Distributors cannot use the nomenclature ‘IFA’ or ‘Wealth Adviser’ or any other similar name unless registered with SEBI as Investment Adviser.
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