SEBI Mandates Standardized Periodic Reporting for Investment Advisers

Editor 07 May 2024 249 Views 0 comment Print SEBI | Circulars, Notifications/Circulars

Introduction: The Securities and Exchange Board of India (SEBI) plays a pivotal role in regulating the securities market, ensuring investor protection, and promoting market development. In a recent circular, SEBI has mandated a standardized format for periodic reporting by Investment Advisers (IAs), aiming to enhance transparency and accountability within the industry.

Detailed Analysis:

1. Regulatory Framework: SEBI, under the IA Regulations of 2013, requires IAs to furnish reports and information periodically. The move towards a standardized reporting format streamlines this process, ensuring consistency and clarity in data submission.

2. Consultative Process: The development of the reporting format involved industry stakeholders, particularly the Investment Advisers Administration and Supervisory Body (IAASB) and the Industry Standards Forum (ISF). This inclusive approach ensures that the format meets the practical needs of the stakeholders.

3. Periodicity and Timelines: IAs are now required to submit reports semi-annually, with deadlines set for the end of September and March. The timeline for submission is clearly defined, ensuring prompt reporting and compliance.

4. Applicability and Compliance: The circular is applicable with immediate effect, highlighting SEBI’s commitment to proactive regulation. By exercising its powers under relevant regulations, SEBI aims to safeguard investor interests and promote market integrity.

5. Enhanced Transparency: The reporting format covers various aspects of IA operations, including organizational details, compliance, certification, client complaints, and fee structures. This comprehensive approach enhances transparency and facilitates regulatory oversight.

6. Investor Protection: Through standardized reporting, SEBI aims to strengthen investor protection mechanisms. The disclosure of complaints, client agreements, and fee structures fosters accountability and builds investor trust in the IA ecosystem.

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Securities and Exchange Board of India

Circular No. SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 Dated: May 07, 2024

To
All Investment Advisers
Investment Adviser Administration and Supervisory Body (IAASB)

Madam/Sir,

Subject: Periodic reporting format for Investment Advisers

1. In terms of Regulation 15(12) of Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (“IA Regulations”), investment advisers are required to furnish to SEBI, information and reports as may be specified by SEBI from time to time.

2. SEBI has recognized Investment Advisers Administration and Supervisory Body (“IAASB”) for the purpose of administration and supervision of Investment Advisers (“IAs”) under regulation 14 of the IA Regulations. At present, the IAASB has been seeking reports from IAs on an ad-hoc basis. It is decided to specify a standardized format for periodic reporting for IAs.

Consultative process for development of periodic reporting format

3. Pursuant to formation of Industry Standards Forum (“ISF”) for IAs, ISF has discussed the development of a standardized format for periodic reporting for IAs and has provided its recommendations to SEBI in this regard. Based on the recommendations received from ISF, a standardized periodic reporting format for submission of information by IAs pertaining to their activities on periodic basis has been prepared. The periodic reporting format is enclosed as Annexure I.

Periodicity of reporting

4. IAs shall submit periodic report for half-yearly periods ending on September 30 and March 31 of every financial year.

Timelines for submission of periodic reports

5. IAASB is directed to make necessary arrangements for obtaining periodic reports from IAs in the format specified in Annexure I and shall issue a circular to IAs in this regard, within thirty days from the date of issuance of this circular.

6. IAs shall submit periodic report in the format specified in Annexure I from the half-yearly period ending on March 31, 2024. The timelines for submission of periodic reports by IAs shall be as under:

6.1. IAs shall submit the periodic report for the half-yearly period ending on March 31, 2024 to IAASB within a period of fifteen days from the date of issuance of circular by IAASB.

6.2. For the subsequent half-yearly periods, IAs shall submit periodic reports within seven working days from the end of the half-yearly period for which details are to be furnished.

Applicability of circular

7. This circular shall become applicable with immediate effect.

8. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 14 and Regulation 15(12) of IA Regulations to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.

9. This circular is available on SEBI website at sebi.gov.in under the categories “Legal > Circulars”, “Info For > Investment Advisers”.

Yours faithfully,

Aradhana Verma
General Manager
Tel. No: 022-26449633
E-mail: aradhanad@sebi.gov.in

Annexure I

Periodic Reporting Format for Investment Advisers

^{General details of Investment Adviser (IA) for the half year ended on …………….. (DD/MM/YYYY)}
^{Sr. No.}	^Particulars		^Details
¹	^{Registered Name of IA (as per SEBI registration certificate)}
²	^{Trade Name/ Brand Name as IA}
³	^{Permanent Account Number (PAN)}
⁴	^{SEBI Registration Number}
⁵	^{Enlistment/Membership Number of IAASB}
⁶	^{Logo (if any) Yes/No}
⁷	^{Date of Birth for individual IA/ Date of Incorporation for Non Individual IA (DD/MM/YYYY)}
⁸	^{Legal Structure (Individual/partnership /LLP/body corporate)}
⁹	^{Registered Office Address}
¹⁰	^{Correspondence Address}
¹¹	^{Address of Principal place of business}
¹²	^{Number of branches}
¹³	^{Addresses of branches (provide details of all branches)}
¹⁴	^{Official Website Address}
¹⁵	^{Details of Social Media handles as an IA (provide details for all such platforms)}		^Facebook	^Twitter		^{Others (Please specify)}
		^{Social Media Type (e.g. Facebook, Twitter, Linkedin, etc.)}
		^{Name of Account /Page/Channel, etc.}
¹⁶	^{Details of bank account/s for receiving advisory fees (provide details of all such bank accounts)}		^{Bank Account-1}	^{Bank Account-2}		^{Bank Account-3}
		^{Name as per Bank Account}
		^{Account No.}
		^{Type of account}
		^{IFSC Code}
		^{Bank Name}
		^{Bank Branch Name}
¹⁷	^{Details of Contact Person}	^Name
		^{Date of Birth (DD/MM/YYYY)}
		^Mobile
		^{Email id}
¹⁸		^Name
	^{Details of Compliance Officer}	^{Date of Birth (DD/MM/YYYY)}
		^Mobile
		^{Email id}
¹⁹	^{Details of Principal Officer (PO)}	^Name
		^{Date of Birth (DD/MM/YYYY)}
		^PAN
		^Mobile
		^{Email id}
		^{Qualification of PO}
		^{Experience of PO (In years)}
		^{Designation of PO (managing director /designated director/ managing partner etc.)}
²⁰	^{Details of Managing Director}	^Name
		^PAN
		^{Date of Birth (DD/MM/YYYY)}
		^DIN
		^Mobile
		^{Email id}
²¹	^{Details of other directors (List of directors)}		^Director-1		^Director-2		^Director-3
		^Name
		^PAN
		^{Date of Birth (DD/MM/YYYY)}
		^DIN
²²	^{Shareholding Pattern (provide details of shareholders having a holding of 10% or more)}		^{Sharehold er-1}		^{Shareholde r-2}		^{Shareholder-3}
		^{Name of shareholder}
		^{Number of shares}
		^{% of shareholding}
²³	^{Total number of Persons Associated with Investment Advice (PAIA)}^{(does not include individual IA or principal officer of non-individual IA)}
²⁴	^{NISM certification details (provide details of all such persons)}	^{Please specify for each person whether the person is IA/PAIA/PO}
		^Name	^Person-1		^Person-2		^Person-3
		^{Email ID}
		^{Date of Birth (DD/MM/YYYY)}
		^PAN
		^{Validity of Certific ate}	^{NISM -X A}	^From ^{(DD/MM/Y YYY)}
				^To ^{(DD/MM/Y YYY)}
			^NISM ^{– X B}	^From ^{(DD/MM/Y YYY)}
				^To ^{(DD/MM/Y YYY)}
²⁵	^{Details of lastinspection}	^{Inspection carried out by: (SEBI/IAASB)}
		^{Date of last inspection (DD/MM/YYYY)}
		^{Period of Inspection}
		^{Any adverse remarks of inspection}
		^{Remedial steps taken to address adverse remarks}
²⁶	^{Details of Advertiseme nts issued}	^{Number of Advertisements issued during the half year period}
		^{Number of Advertisements approved by IAASB during the half year period}
²⁷	^{Publishing of Complaints and Investor Charter}	^{Whether complaints data have been updated on the website of the IA or in absence of website, communicated to clients by 7th of the succeeding} ^{month for each month of the half year period (Yes/No)}
		^{Whether Investor Charter has been published on the website of the IA or in absence of website, communicated to clients (Yes/No)}

–

Details of the complaints against Investment Adviser (IA) for the half year ended on ….. (DD/MM/YYYY)
Sr. No.	Particulars				Complaints received through SCORES	Complaints from other sources	Total
1	Number of complaints pending at the end of previous half yearly period (a)
2	Number of complaints received during the period (b)
3	Total number of complaints resolved during the period (c)
4	Total number of complaints pending at the end of the period (a+b-c) = (d)
5	Ageing details of complaints pending at the end of the period		Total number of complaints pending for up to 21 days (a)
			Number of complaints pending from 22-90 Days (b)
			Number of complaints pending for more than 90 Days (c)
			Total number of complaints pending (a+b+c)=d
6	Average Complaint resolution time (Average complaint Resolution time is the sum total of time taken to resolve each complaint in days, in the concerned half year period divided by total number of complaints resolved in the said half year period.)
7	Break- up of type of complaints received during the period	Inappropriateness/ unsuitability of advices
		Issues related to excess fee charged		Under Fixed fee mode
				Under Assets under Advice (AUA) based fee mode
		Inadequacy/ issues related to services
		Promise of assured returns
		Agreement related complaints
		Other (please specify)

–

Details of Clients, Assets under Advice (AUA) and Fees for the half year ended on ………. (DD/MM/YYYY)
Sr. No .	Particulars	Individual			Non-Individual			Total (A+B+ C+D+E +F)
Sr. No .	Particulars	Reside nt (A)	Non – Res ide nt(B)	FPI(C )	Reside nt (D)	Non- Reside nt (E)	F PI (F)	Total (A+B+ C+D+E +F)
1	Number of clients at the end of the previous half yearly period (i)
2	Number of client agreements entered into during the period (ii)
3	Number of client agreements expired/terminated during the period (iii)
4	Number of clients at the end of the period (iv = i + ii – iii)
5	Maximum number of client agreements in force on a single day during the period
6	Fees charged during the period (in Rs.)	Total Fees under fixed fee mode (a)
		Total Fees under AUA based fee mode) (b)
		Total Fees collected for Accredited Investors (c)
		Total Fees (a + b + c = d)
7	Number of clients who have opted for AUA based fee mode at the end of the period
8	Number of clients who are Accredited Investors
9	Net Assets under Advice as at the end of the period (in Rs.) (for clients who have opted for AUA based fee mode)	Equity Debt Equity Derivatives Mutual funds Other SEBI regulated products (Please specify) Other investment products under purview of other financial sector regulators(Please specify)
		Total