Executive Summary:
SEBI circular outlines a framework for the administration and supervision of Investment Advisers (IAs) by recognizing BSE Administration Supervision Limited (BASL) as the Investment Adviser Administration and Supervisory Body (IAASB) for three years from June 1, 2021. It details IAASB's responsibilities, governance, and the compliance requirements for SEBI-registered IAs, including joining IAASB within three months of recognition.
Key Points / Main Content:
IAASB Recognition and Role:
* BSE Administration Supervision Limited (BASL) is recognized as IAASB for three years from June 1, 2021.
* IAASB is responsible for the administration and supervision of IAs.
* IAASB responsibilities include: supervision of IAs (onsite and offsite), grievance redressal, administrative action, monitoring activities of IAs, submitting reports to SEBI, and maintaining an IA database.
IAASB Governance:
* IAASB Board must be chaired by a Public Interest Director.
* IAASB Board must include a Director representing investor perspective.
* SEBI will continue to concurrently administer and supervise all registered IAs and IAASB shall be subject to periodic inspection by SEBI.
IA Compliance Requirements:
* Existing IAs must seek membership of IAASB within three months of IAASB recognition.
* IAs must pay membership fees to IAASB as prescribed by IAASB, at the time of payment of fees to SEBI.
* IAs must submit periodic reports to IAASB as specified by IAASB.
* Fees payable to SEBI have been modified with effect from April 01, 2021.
Impact Analysis:
Investment Advisers (IAs):
* Impact: Required to comply with IAASB's directives for continued registration, including membership, fee payments, and reporting.
* Action Required: Seek IAASB membership within three months of recognition, pay membership fees to IAASB, and submit periodic reports as required.
Clients of IAs:
* Impact: Benefit from enhanced supervision and grievance redressal mechanisms through IAASB.
* Action Required: Utilize IAASB's grievance redressal mechanism if needed.
SEBI:
* Impact: Shares supervisory responsibilities with IAASB but retains concurrent administration and supervision rights.
* Action Required: Continue concurrent administration and supervision of registered IAs and conduct periodic inspections of IAASB.
Key Entities Referenced
SEBI Investment Advisers Regulations, 2013: Regulations governing Investment Advisers (IAs) issued by the Securities and Exchange Board of India (SEBI).
Investment Adviser Administration and Supervisory Body (IAASB): An entity recognized by SEBI to regulate Investment Advisers (IAs) and delegate administration and supervision of IAs.
BSE Administration Supervision Limited (BASL): A wholly owned subsidiary of BSE Limited, recognized as the Investment Adviser Administration and Supervisory Body (IAASB) for a period of three years from June 01, 2021.
BSE Limited: Parent company of BSE Administration Supervision Limited (BASL).
Securities and Exchange Board of India (SEBI): The regulatory body for securities markets in India, responsible for overseeing Investment Advisers and IAASBs.
Securities and Exchange Board of India Act, 1992: The act of parliament that established the Securities and Exchange Board of India (SEBI) and defines its powers and functions.
Public Interest Director: The chair of the IAASB board, ensuring the board acts in the public interest.
Investment Advisers (IAs): Professionals or firms providing investment advice, regulated under SEBI Investment Advisers Regulations, 2013.
CIRCULAR
SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 June 18, 2021
To
All Investment Advisers
Investment Adviser Administration and Supervisory Body
Dear Sir / Madam,
Subject: Framework for administration and supervision of Investment
Advisers under the SEBI (Investment Advisers) Regulations, 2013
1. As per Regulation 14 of the SEBI (Investment Advisers) Regulations 2013 (“IA
Regulations”), SEBI may inter-alia recognize any body or body corporate for the
purpose of regulating Investment Advisers (“IA”) and delegate administration and
supervision of the IAs on such terms and conditions as may be specified.
Accordingly, an entity granted recognition under the aforesaid Regulation shall be
designated as “Investment Adviser Administration and Supervisory Body” (“IAASB”)
and shall be entrusted with the administration and supervision of IAs.
2. 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 01, 2021. The details may be perused in the Press Release
issued by SEBI on June 14, 2021 and available at
https://www.sebi.gov.in/media/press-releases/jun-2021/bse-administration-and-
supervision-limited-granted-recognition-for-administration-and-supervision-of-
investment-advisers_50540.html, which also provides a link for the Standard
Operating Procedure (SOP) and the Frequently Asked Questions (FAQs) issued by
BASL.
3. IAASB shall inter-alia have following responsibilities:
i. Supervision of IAs including both on-site and offsite
ii. Grievance redressal of clients and IAs
iii. Administrative action including issuing warning and referring to SEBI for
enforcement action
iv. Monitoring activities of IAs by obtaining periodical reports
Page 1 of 3v. Submission of periodical reports to SEBI
vi. Maintenance of database of IAs
4. The Board of the IAASB shall, at all times, be chaired by a Public Interest Director
and shall also have, at all times, a Director who will bring investor perspective.
5. SEBI shall continue to concurrently administer and supervise all registered IAs and
IAASB shall be subject to periodic inspection by SEBI.
6. Pursuant to grant of aforementioned recognition, SEBI registered IAs are required to
ensure compliance with the following:
i. Membership of IAASB
In order to ensure compliance with Regulation 6(n) of the IA Regulations and to
keep their registration in force, existing IAs shall seek membership of IAASB in
such manner as may be specified by the IAASB, within three months of the
recognition of IAASB by SEBI.
ii. Payment of fees
a. The fees payable to SEBI has been modified by way of amendment to IA
Regulations, with effect from April 01, 2021, details of the same are available
at https://www.sebi.gov.in/legal/regulations/jan-2021/securities-and-
exchange-board-of-india-investment-advisers-amendment-regulations-
2021_49541.html and https://www.sebi.gov.in/legal/regulations/jan-
2021/corrigendum-to-the-securities-and-exchange-board-of-india-investment-
advisers-amendment-regulations-2021_48848.html.
b. Accordingly, unless specified otherwise by SEBI, existing IAs shall be required
to pay membership fees to IAASB in a manner prescribed by IAASB, at the
time of payment of fees to SEBI as per Second Schedule to the IA
Regulations, to keep their registration in force. Any subsequent payment of
membership fees shall be in the manner specified by IAASB.
For details with respect to membership process, membership fee structure as
well as contact details of IAASB, FAQs under the link provided in the Press
release issued by SEBI upon recognition of IAASB, may be referred.
iii. Reporting
All SEBI registered IAs shall submit periodic reports to IAASB in such manner as
Page 2 of 3may be specified by IAASB.
7. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 14(2) of the
IA Regulations to protect the interests of investors in securities market and to promote
the development of, and to regulate the securities market.
8. The circular is available on SEBI website at www.sebi.gov.in under the categories
“Info for – Investment Advisers” and "Legal framework - Circulars".
Yours faithfully,
Manaswini Mahapatra
General Manager
+91-22-26449375
manaswinim@sebi.gov.in
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