The Securities and Exchange Board of India (SEBI) has issued detailed guidelines to strengthen investor protection and promote transparency among research analysts (RAs) and investment advisers (IAs). These guidelines follow the December notification of updated RA and IA regulatory frameworks.
Key Highlights of the New Guidelines
Qualification Standards and Fee Structures
SEBI has introduced updated norms on qualifications, fee structures, and deposit requirements, along with strict client segregation protocols.
Deposit Mandates
- Research analysts are now required to maintain a graded deposit based on their client base:
- ₹1 lakh for up to 150 clients.
- ₹10 lakh for over 1,000 clients.
- Investment advisers must comply with a similar system tied to client numbers.
- Existing IAs must adhere to these deposit requirements by June 30, 2025, while research analysts have until April 30, 2025. New entrants must comply immediately.
Dual Registrations Allowed
Entities can now register as research analysts and investment advisers, provided their advisory and research functions are kept distinct and compliant with separate frameworks. SEBI mandates client-level segregation to avoid conflicts of interest, ensuring that the same entity or group does not provide advisory services and distribution services simultaneously. 
Focus on AI Integration and Data Security
With the growing adoption of artificial intelligence in financial services, SEBI requires RAs and IAs to disclose their use of AI tools and ensure robust data security measures. These disclosures must comply with applicable regulations to safeguard client interests.
Compliance and Reporting Obligations
RAs and IAs must undertake annual compliance audits and submit reports to their supervisory bodies:
- Research Analyst Administration and Supervisory Body (RAASB).
- Investment Adviser Administration and Supervisory Body (IAASB).
- Adverse findings and corrective actions must be published on their websites.
Entities are also required to:
- Establish functional websites with mandatory disclosures.
- Adhere to Know Your Customer (KYC) norms for all clients.
Part-Time Registrations
SEBI has introduced provisions for part-time RAs and IAs, allowing professionals such as teachers, architects, and lawyers to register, provided their primary occupations do not conflict with market regulations.
However, individuals involved in unregistered advisory activities related to securities will remain ineligible for registration.
Enhanced Transparency for Model Portfolios and Non-SEBI-Regulated Products
- RAs must provide detailed reports for model portfolio recommendations, including benchmarking, risk disclosures, and rationale.
- IAs offering financial planning services involving non-SEBI-regulated products must secure client declarations acknowledging limited regulatory oversight.
Investor-Centric Measures
These comprehensive guidelines boost investor confidence by ensuring transparency, compliance, and fair practices among market participants.
With these measures, SEBI aims to enhance governance in India’s financial advisory sector while addressing emerging trends such as AI integration and dual registrations.
