SEBI Mandates Transparency: Research Analysts and Advisers to Standardize Terms

The Securities and Exchange Board of India (SEBI) has directed research analysts and investment advisers to disclose key service terms to clients by 2025. These conditions, known as MITC, must be standardized. Analysts must adhere to fee limits and cannot promise guaranteed returns. New agreements must include these terms.

The Securities and Exchange Board of India (SEBI) on Monday issued a directive for research analysts and investment advisers, mandating the disclosure of their most important service terms to clients.

Labeled as Most Important Terms and Conditions (MITC), these stipulations are to be standardized with guidance from the Industry Standards Forum, in consultation with SEBI and supervisory bodies such as the Research Analyst Administration and Supervisory Body (RAASB) and Investment Adviser Administration and Supervisory Body (IAASB), as highlighted by two separate circulars.

According to SEBI, existing clients must be informed of MITC by June 30, 2025, via email or another preservable format. New clients must sign agreements that include MITC. Analysts should ensure compliance with SEBI conflict of interest regulations and prohibit guaranteed return schemes. Fees must adhere to prescribed limits and be paid through legitimate methods. SEBI clarified the current annual fee limits for different advisory modes. Investment advisers must also integrate MITC in advisory agreements and clearly state that trades will not be executed without explicit client consent. These directives are effective immediately.