Securities and Exchange Board of India (SEBI) has introduced amendments to the SEBI (Intermediaries) Regulations, 2008, through the SEBI (Intermediaries) (Second Amendment) Regulations, 2025. The key change involves the insertion of Chapter IIIC, which mandates the verification of past risk and return metrics for Investment Advisers, Research Analysts, and Algorithmic Trading Providers empaneled with recognized stock exchanges. Under the new provisions, these entities can make claims regarding returns or performance only if verified by a SEBI-recognized credit rating agency acting as a Past Risk and Return Verification Agency. The amendment specifies that claims must be presented in a manner prescribed by SEBI. In case of non-compliance, SEBI retains the authority to take disciplinary action under Chapter V of the regulations. The amendment took effect upon its publication in the Official Gazette on March 20, 2025.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 20th March, 2025
SECURITIES AND EXCHANGE BOARD OF INDIA (INTERMEDIARIES) (SECOND AMENDMENT)
REGULATIONS, 2025
F. No. SEBI/LAD-NRO/GN/2025/237.—In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, namely: –
1. These regulations may be called the Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2025.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Intermediaries) Regulations, 2008,—
(I) after Chapter IIIB and before Chapter IV, the following Chapter shall be inserted, namely,—
“CHAPTER IIIC
VERIFICATION OF PAST RISK AND RETURN METRICS
Applicability
16D. The provisions of this chapter shall be applicable only to Investment Advisers, Research Analysts, Algo Providers empaneled with a recognised stock exchange, and intermediaries permitted by the Board to provide the services of Investment Advisers, Research Analysts and Algorithmic Trading.
Explanation – For the purposes of this Chapter, an algo provider shall mean a person empaneled with a recognised stock exchange for providing the facility of algorithmic trading services, in the manner specified by the recognised stock exchange.
Verification of risk-return metrics
16E (1). The persons referred to in Regulation 16D shall be permitted to make claim of returns or performance in the form of risk and return metrics, which have been verified by a credit rating agency recognized by the Board to carry out the activity of a Past Risk and Return Verification Agency.
(2) Any claim in the form of verified risk or return metrics as referred to in sub-regulation (1) shall be made in the manner specified by the Board.
Action for Violation
16F. The Board may, in case of violation of sub-regulations (1) or (2) of Regulation 16E, take such action as it may deem fit including action under Chapter V of these regulations.”
BABITHA RAYUDU, Executive Director
[ADVT.-III/4/Exty./1047/2024-25]
Footnote:
1. The Securities and Exchange Board of India (Intermediaries) Regulations, 2008 was published in the Gazette of India, Part III Section 4 on May 26, 2008 vide notification LAD-NRO/GN/2008/11/126538.
2. The Securities and Exchange Board of India (Intermediaries) Regulations, 2008 was subsequently amended on: –
a) August 11, 2008 by the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) (Amendment) Regulations, 2008, vide notification No. LAD-NRO/GN/2008/20/134766.
b) July 14, 2009 by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2009, vide notification no. LAD-NRO/GN/2009-10/12/169546.
c) January 7, 2014 by the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, vide notification no. LAD-NRO/GN/2013-14/36/12.
d) May 25, 2016 by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2016, vide notification no. SEBI/LAD-NRO/GN/2016-17/006.
e) November 21, 2017, by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2017, vide notification no. SEBI/LAD-NRO/GN/2017-18/021.
f) April 17, 2020, by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020, vide notification no. SEBI/LAD-NRO/GN/2020/10.
g) January 21, 2021, by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2021, vide notification no. SEBI/LAD-NRO/GN/2021/07.
h) May 5, 2021, by the Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2021,vide notification no. SEBI/LAD-NRO/GN/2021/20.
i) August 3, 2021, by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021, vide notification no. SEBI/LAD-NRO/GN/2021/30.
j) November 17, 2021,by the Securities and Exchange Board of India (Intermediaries) (Third Amendment) Regulations, 2021, vide notification no. SEBI/LAD-NRO/GN/2021/59.
k) August 1, 2022, by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2022, vide notification no. SEBI/LAD-NRO/GN/2022/91.
l) August 29, 2024, by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2024, vide notification no. SEBI/LAD-NRO/GN/2024/201.
m) December 4, 2024, by the Securities and Exchange Board of India (Intermediaries) (Second Amendment) Regulations, 2024, vide notification no. SEBI/LAD-NRO/GN/2024/216.
n) February 6, 2025, by the Securities and Exchange Board of India (Intermediaries) (Amendment) Regulations, 2025, vide notification no. SEBI/LAD-NRO/GN/2025/226.
