SEBI amendment to investment advisor regulations addresses AI concerns

Definition of investment advice:

The definition of investment advice has been revised to exclude trading calls. Additionally, a new category of “part-time investment advisors” has been introduced.

Qualifications and certifications:

The minimum qualification requirements for persons associated with investment advice have been relaxed. Now, graduates can become SEBI certified RNs, which is a departure from the earlier requirement that only professionals could register as RNs.

However, mandatory NISM certifications have been introduced for individual investment advisers, principal officers of non-individual investment advisers and associated persons.

Filing Requirements:

Investment advisers are now required to maintain a specified deposit with a scheduled bank. This deposit may be used to resolve disputes arising from arbitration and conciliation proceedings.

Registration process:

A separate registration form has been introduced for part-time investment advisors. Individual advisors exceeding 300 clients or earning fees in excess of ₹3 crore per annum must move to non-individual registration within three months. Additionally, part-time advisors are limited to a maximum of 75 clients. Non-individual investment advisers are required to appoint a compliance officer responsible for ensuring compliance with the regulations.

Customer relations and reporting:

Investment advisers must keep detailed records of client information, including PAN details and details of advice provided. Records of customer communications, including emails and call recordings, must also be retained.

Website Maintenance:

Investment advisors are now required to maintain a functional website with specified details.