First of all, a sincere apology for bring these to your attention a little late due to some adverse situation at personal front. We will ensure to keep you updated without much delay going forward.
Recent regulatory updates have brought significant changes for Registered Investment Advisors (RIAs). In this article, we’ll cover the latest compliance updates issued by SEBI, including periodic reporting formats, CKYC downloading consent, and more. It’s crucial to stay informed about these changes to ensure compliance and avoid any potential penalties.
A brief of all the recent developments is as below-
1. Periodic reporting format for Investment Advisers
SEBI issued circular SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 dated May 07, 2024 prescribing a standardized periodic reporting format for submission of information by IAs pertaining to their activities on periodic basis.
Highlights of the circular
- Periodicity of said report have been fixed as half-yearly periods ending on September 30 and March 31 of every financial year.
- Format for the report has been specified in Annexure A of the said circular.
- IAASB (BASL) has been instructed to make necessary arrangements for obtaining periodic reports and issue a circular in this regard within thirty days.
- Submission of report would start from the half-yearly period ending on March 31, 2024.
- For the half-yearly period ending on March 31, 2024, the report if to be submitted within a period of fifteen days from the date of issuance of circular by IAASB.
- For the subsequent half-yearly periods, Reports are to be submitted within seven working days from the end of the half-yearly period for which details are to be furnished.
The said circular may be referred using below link for formats and further details- https://taxguru.in/sebi/sebi-mandates-standardized-periodic-reporting-investment-advisers.html
Action point-
To save the hassle of last-minute trouble, it is suggested to collect the data for the half-yearly period ending on March 31, 2024 in the format as mentioned in the circular.
2. Framework for administration and supervision of Research Analysts and Investment Advisers
SEBI issued circular SEBI/HO/MIRSD/MIRSD-SEC-3/P/CIR/2024/34 dated May 02, 2024 detailing the framework for administration and supervision of Research Analysts and Investment Advisers.
The said circular would not have much impact on IAs as IAs are already part of a similar structure as on date vide BASL.
The said circular may be referred using below link for further details- https://taxguru.in/sebi/sebi-framework-research-analysts-investment-advisers.html
3. CKYC Downloading Consent
CENTRAL KYC RECORDS REGISTRY (CKYCRR) vide its notification CKYC/2024-25/5016 dated April 01, 2024 have instructed all the Reporting Entities registered with CKYCRR were requested to obtain the consent from the customer for downloading their CKYC record from CKYCRR.
All the IAs are required to register themselves with CKYCRR for KYC compliance. Whenever a customer is to be on-boarded and submits a KYC Identifier to IA, then IA can retrieve the KYC records online from the CKYCR using the KYC Identifier and the customer shall not be required to submit the same KYC records or information for on-boarding. The downloaded documents along with the information may be used for the on-boarding and recording of KYC, if there is no change in KYC information of the client. Post the above said circular, IAs will have to obtain the consent from the customer for downloading their CKYC record from CKYCRR.
CKYCRR w.e.f. 13.03.2024 has started sending SMS to the customers every time their KYC record is downloaded by anyone. Post the start of SMS facility, complaints from customers stating that their KYC record has been downloaded without their consent are lodged with CKYCRR.
Action point-
In view of the above, it is advised to all the IAs to start obtaining the consent from the customer for downloading their KYC form KRA and CKYC. For the same, you may devise your own format or may include below as part of your agreement clause.
“The Client(s) gives consent to the Investment Advisor to fetch/ validate/ update the KYC records of the client(s) from CKYCR portal and KRA portal”
The said circular may be referred using below link for further details- https://www.ckycindia.in/ckyc/assets/doc/Download_Consent_Notification.pdf
4. SCORES Portal Update- SCORES 2.0
SEBI vide press release PR No. 06/2024 dated April 01, 2024 provided the details of the new version of SCORES strengthens the investor complaint redress mechanism in the securities market by making the process more efficient through auto-routing, auto-escalation, monitoring by the ‘Designated Bodies and reduction of timelines.
Prior to the same, SEBI vide Circular with reference number SEBI/HO/OIAE/IGRD/ CIR/ P/2023/156 dated September 20, 2023 had appointed the Designated Bodies and defined the roles and responsibilities of the SEBI regulated entities and the Designated Bodies. The timelines for redressal of investor complaints have been reduced to 21 Calendar days from date of receipt of complaint.
The press release also mentioned
- the changed URL for SCORES website from https://scores.gov.in to https://scores.sebi.gov.in.
- Discontinuation of old SCORES app and launch of new app soon, which is still awaited.
Action point-
As per SEBI mandate, SCORES website and APP link is to be mentioned in Grievance redressal process and on website of IAs. Accordingly, please change the URL of SCORES as mentioned in your Grievance redressal process and on website to https://scores.sebi.gov.in. Further, as and when new app is launched, please change the APP link as well.
The said Press Release may be referred using below link for further details- https://taxguru.in/sebi/sebi-scores-2-0-strengthening-investor-complaint-redressal.html
5. Display of Advertisement Approval Number
BASL issue Circular 20240315-2 dated March 15, 2024 mandating display of Advertisement Approval Number while publishing advertisements.
The approval number should be displayed as “Advertisement Approval Number” followed by the application number in the advertisement. For e.g. In the advertisement approval letter: “……This is with reference to your application no. 000001 dated: XX/XX/XXXX along…..”, the Advertisement Approval Number is 000001. While displaying the same in the advertisement, it should be displayed as “Advertisement Approval Number:000001”.
A list of IA wise advertisement approved by BASL is also made available on the following link for verification of BASL approved advertisements: bseasl.com/apprv_advertisement_app.aspx
Action Point-
1. All the advertisements approved from March 15, 2024 should display BASL application number as a part of the said advertisement while publishing the same.
2. Advertisements approved as well as published before March 15, 2024 are not required to be modified. However, Advertisements approved by BASL but not yet issued as on March 15, 2024 should display the Advertisement Approval Number at the time of issuance of such advertisements.
The said circular may be referred using below link for further details- https://www.bseasl.com//jiqwertyupihasgahas00990nsjdfnds/UploadDocs/Circulars/20240315-2/20240315-2.pdf
6. SEBI order for cancelation of Registration
SEBI vide its order QJA/GR/WRO/WRO/30286/2024-25 dated April 24, 2024 cancelled the registration of concerned Investment Adviser.
List of primary violations as mentioned in the order is as below-
1. Failure to comply with qualification and certification requirements,
2. Failure to submit documents in respect of qualification requirement sought by SEBI
3. Failure to follow proportionate fee structure
4. Failure to follow the prescribed format of agreement
5. Failure to maintain proper records
6. Failure to maintain proper client samples
7. Promised assured returns, offered trial to prospective clients and charged part payment for providing services
7. Removal of Name from SEBI registry on non-payment of renewal fee
SEBI has recently begun removing the names of registered intermediaries from its registry if they fail to pay their renewal fees by the deadline. Previously, these names remained on the website and registry despite non-payment.
An email in this regard has been received by the entities who missed their payment and whose names were removed mentioning below-
“Please note that the due fees required to keep your registration in force has not been paid. Accordingly, in terms of para 3 of Second Schedule of SEBI Investment Advisers Regulations, 2013, your registration is no longer in force and it stands lapsed. Further, your SI portal login is disabled and your registration details including your name shall be removed from list of SEBI registered Investment Advisers. Any continuation of the IA activity beyond the date of lapse shall be viewed as an IA activity without a valid registration from SEBI. However, if you so desire, you may make a fresh application for registration as Investment Adviser to SEBI. Also, your BASL Membership stands Expired on account of the same.”
In light of this development, we urge you to check the status of your renewal and prioritize payment if it is upcoming. Failure to do so may lead to accusations of engaging in unregistered activities, as your name will no longer appear as a registered intermediary upon removal.
Please take prompt action to avoid any potential consequences.
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