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SEBI's Comprehensive Framework for the Administration and Supervision of Research Analysts and Investment Advisers


On 02.05.2024, the Securities and Exchange Board of India (‘SEBI’), notified an exhaustive framework for the administration and supervision of Research Analysts (‘RAs’) and Investment Advisers (‘IAs’) (‘Framework’) through circular no. SEBI/HO/MIRSD/MIRSD-SEC-3/P/CIR/2024/34 (‘circular’). The circular is issued in the exercise of powers conferred under s.11 (1) of the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) r/w r. on 14 of the SEBI (Research Analysts) Regulations, 2014 (‘RA Regulations’) and SEBI (Investment Advisers) Regulations, 2013 (‘IA Regulations’). The objective of introducing the framework is to streamline processes, enhance investors' protection and promote market development. The circular shall become operative from 25.07.2024.

Before delving into the circular framework, it is imperative to understand the background leading to the prudent Framework and its enactment.


Who are RAs and their functions?

RAs are individuals responsible for the preparation or publication of the content of the research report. They provide research reports and make ‘buy,’ ‘sell,’ and ‘hold’ recommendations or provide price targets and they also provide opinions concerning public offers. The role of RAs is limited to the scope of listed securities, or which are about to get listed in the stock exchange (‘SE’). RAs are regulated under the RA Regulation.

Who are IAs and their functions?

IAs are individuals entrusted with offering unbiased and personalized investment advice to clients based on their financial goals, risk profile, and investment preferences. They are regulated under the IA Regulations.

As per r. 38A of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (‘SECC Regulations’), a recognized SE may undertake the activities such as administration and supervision over specified intermediaries on such terms and conditions and to such an extent as may be specified. Furthermore, SE shall now be recognized as a Research Analyst and Supervisory Body (‘RAASB’) and Investment Adviser Administration and Supervisory Body (‘IAASB’) for the administration and supervision of RAs and IAs.

As per r. 6(xi) of RA Regulations and r. 6(n) of the IA Regulations, RAs and IAs are required to be enlisted with the RAASB and IAASB, respectively.

Previously, the RAASB and IAASB were governed through SEBI circular no. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 dated 18.06.2021 (‘Old Circular’) and subsequently incorporated under the head of ‘Administration and Supervision of Investment Advisers’ of Master Circular for Investment Advisers numbered SEBI/HO/MIRSD-PoD-2/P/CIR/2023/89 dated 15.06.2023 (‘Old Master Circular’).  From the effective date of this circular, the Old Circular and the Old Master Circular shall stand rescinded.

The Framework provided under the circular can be summarised as follows:

  • Point no. 1 of the Framework outlines the criteria for the grant of recognition of SE as RAASB and IAASB. Point 1.1 of the Framework lays down the criteria for an SE to be recognized as RAASB and IAASB which are as follows:

a. The SE should have been in existence for a minimum of 15 years,

b. The recognized SE should have a minimum net worth of Rs. 200 Crores,

c. The SE should have nationwide terminals,

d. The SE should have an investor grievance redressal mechanism, including an Online Dispute Resolution Mechanism (‘ODRS’), and

e. The SE should have the capacity for investor service management, assessed through the reach of Investors Service Centres (‘ISCs’), with ISCs present in at least 20 cities.

  • Point no. 2 of the Framework addresses the establishment of requisites by SE recognized as RAASB/IAASB. Point no. 2.2 states that SE recognized as RAASB/IAASB must maintain necessary infrastructure, including adequate office space, equipment, and manpower, to effectively discharge the responsibilities of RAASB/IAASB. Infrastructure may be shared with other group entities where required. Point no. 2.3 and 2.4 of the Framework require the establishment of systems/processes for maintaining a database of RAs/IAs, sharing information with SEBI, and fulfilling the responsibilities of RAASB/IAASB. RAASB and IAASB shall constitute an internal committee to oversee the activities of RAs and IAs. The committee shall periodically review the performance of the SE as RAASB/IAASB and make recommendations to SEBI. The committee shall be composed of

a. Public Interest Directors forming the majority of the committee,

b. A maximum of two key management personnel of the SE can be on the committee, and

c. The committee shall also include independent external persons representing RAs, IAs, and proxy advisors, with a minimum of one representative for each segment.

  • Point no. 3 of the Framework lays down the Responsibilities of SEBI and RAASB/IAASB. In which the SEBI retains core functions like registration, enforcement, and disciplinary actions. RAASB/IAASB shares responsibilities such as registration approval, administration tasks, supervision, and grievance redressal, and may conduct inspections as directed by SEBI, ensuring compliance and oversight in the investment adviser realm.

  • Point no. 4 of the Framework specifies that RAs/IAs are required to enlist with RAASB/IAASB instead of obtaining membership as per earlier provisions. Additionally, existing RAs registered with SEBI are automatically enlisted with RAASB, while IAs registered with SEBI, and members of BSE Administration and Supervision Limited (‘BASL’), are enlisted with IAASB. Pending applications with SEBI/BASL will be processed accordingly. New applications submitted after the framework implementation must enlist with RAASB/IAASB.

  • Point no. 5 of the Framework states that any action taken or purported to be taken or any action that may be taken against any person in relation to the membership of IASSB recognized under r.14 of IA regulated shall be deemed to have been done or taken under the corresponding provisions of amended IA regulations.

  • Point no. 6 of the Framework provides for measures for promoting efficiency in the system and economies of scale RAASB and IAASB shall be the same SE. Wherein, IA and RA have both the registration and in the interest of efficiency, a single window clearance of various approvals shall be adopted. Details in this regard shall be specified by the recognised RAASB and IAASB.

  • Point no. 7 of the Framework states that pursuant to the operationalization of the RAASB/IAASB framework, all registered RAs/IAs shall submit periodic reports to RAASB/IAASB in the manner specified by SEBI.

  • Point no. 8 of the Framework states that SEBI shall monitor RAASB and IAASB through periodical reports and inspection reports regarding the administration and supervision of RAs and IAs.


RAs and IAs play a pivotal role in the securities market. However, due to inadequacies and inconsistencies in the Older Circular and Older Master Circular, SEBI has decided to issue a new circular regarding the administration and supervision of RAs/IAs. The circular, issued by the SEBI provides a Framework for administration and supervision of RAs/IAs superseding the Older Circular and Older Master Circular. From understanding the circular, it can be inferred that the SEBI’s objective is to streamline and promote efficiency in administering and supervising the RAs and IAs.

Authored by Kushagra Gahlot, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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