Yes, SEBI’s recognition of the Past Risk and Return Verification Agency (PaRRVA) enables SEBI-registered Investment Advisers (IAs), Research Analysts (RAs), Algo Traders, and their agents to market their services using verified past performance data.
What is PaRRVA, and why is it important?
In its 208th Board Meeting held on December 18, 2024, SEBI approved the recognition of PaRRVA, a move aimed at enhancing transparency and trust in the financial ecosystem.
Key features of PaRRVA include:
1. Verification of Metrics: PaRRVA will authenticate the past performance metrics of IAs, RAs, and Algo Traders.
2. Operational Mechanism:
- A Credit Rating Agency (CRA) will act as PaRRVA.
- A recognized stock exchange will serve as the PaRRVA Data Centre (PDC) to ensure streamlined data management.
3. Pilot Program: PaRRVA will operate on a pilot basis for two months to gather feedback and refine processes.
This initiative ensures that only credible, verified performance data is used for marketing, fostering trust among investors.
What’s Next for IAs and RAs?
- SEBI will soon issue detailed guidelines on the verification process.
- Availing PaRRVA’s services will not be mandatory unless an entity wishes to market its services using past risk-return metrics.
Why Does This Matter?
This framework offers a dual advantage:
1. Transparency for Investors: Verified metrics enable informed decision-making.
2. Credibility for Advisers: RIAs and RAs can confidently showcase their expertise, attracting potential clients.
To read more: https://www.sebi.gov.in/media-and-notifications/press-releases/dec-2024/sebi-board-meeting_90042.html
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