NEWS & ADVICE : FIXED DEPOSITS
SEBI tightens norms for investment advisors
By Neelima Shankar
Oct 16, 2012
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The stock market regulator, Securities and Exchange Board of India (SEBI), has tightened norms for entities to become investment advisors. According to the modified regulations, from now on only those entities will be permitted to provide investment advisory services in stocks and capital markets, which have a good CIBIL report and have acceptable research capacity.

SEBI reframed the norms for Investment Advisors in consultation with other regulatory agencies such as the Reserve Bank of India, IRDA and PFRDA and also incorporated appropriate suggestions received from the public, for which a concept paper was distributed to members of the public.

On the matter, a senior official said that the norms were changed to provide increased protection to investors in the stock market. A number of modifications have been introduced in the draft regulations for investment advisors put forward by SEBI. The first one among these is the mandatory requirement of a CIBIL score or CIBIL report by the entity. The second modification calls for the entity to submit the details of its research facility to SEBI, which will decide whether or not it is good enough to provide investment advice to public.

In addition to this, the draft changes also make it necessary for the entity seeking to enter investment advisory services, to be registered with SEBI subject to some exceptions.

The new norms are expected to become applicable after three months of their notification.


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