?? SEBI Introduces Major Updates to Investment Adviser Regulations - Key Highlights from Latest Amendment (December 2024)
Narendar Kumar Rathod, CFP???
Certified Financial Planner | Corporate Financial Wellness Specialist | Wealth Protection & Tax-Advantaged Retirement Strategist ??
The Securities and Exchange Board of India (SEBI) has introduced significant changes to the Investment Adviser (IA) Regulations through its Second Amendment of 2024. Here are the crucial updates that investment professionals need to know:
?? Introduction of Part-Time Investment Advisers
- A new category of "part-time investment advisers" has been introduced
- These advisers can engage in other business activities or employment, provided they're not related to securities
- Part-time IAs are limited to serving maximum 75 clients at any point
?? Individual IA to Non-Individual Transition
- Individual IAs must transition to non-individual status if they exceed 300 clients or collect fees over ?3 crore in a financial year
- Three-month in-principle registration provided to assist in transition
?? AI Integration Guidelines
- IAs using Artificial Intelligence tools must take full responsibility for:
- Client data security and confidentiality
- Investment advice based on AI outputs
- Compliance with applicable laws
?? Enhanced Compliance Requirements
- Mandatory functional website with specified details
- Detailed record-keeping of client communications
- PAN details must be maintained in client lists
- New disclosure requirements for services outside SEBI's purview
?? Qualification Requirements Updated
- Graduate degree now acceptable along with post-graduate qualifications
- Continuous certification requirements maintained through NISM
- Partners in IA firms must meet qualification requirements or transition to LLP/corporate structure
?? Financial Requirements
- "Networth" requirement replaced with "deposit" requirement
- Deposit to be maintained with scheduled banks
- Funds earmarked for dispute resolution purposes
These changes aim to enhance professionalism, transparency, and client protection in the investment advisory space while accommodating modern technological advancements and diverse business models.
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