Sebi Expands Fee Framework for Investment Advisers

Sebi board has decided to allow investment advisers (IAs) and research analysts (RAs) to charge advance fees for up to one year if the client agrees. Previously, IAs and RAs could only charge up to two quarters and one quarter, respectively. This change aims to address industry concerns.

The Securities and Exchange Board of India (Sebi) has announced a significant change in its fee framework for investment advisers (IAs) and research analysts (RAs), allowing them to charge advance fees for up to one year, provided the client agrees. This marks a notable shift from the earlier rules, where IAs could charge for up to two quarters and RAs for just one quarter.

The decision comes in response to industry feedback, as Sebi chairman Tuhin Kanta Pandey explained that the previous six-month and three-month fee collection limits had redrawn concerns from professionals within the sector. He noted that this move aims to offer more flexibility while maintaining existing compliance protocols concerning fee structures and refunds.

Furthermore, in efforts to bolster the trading landscape of lower-rated debts, Sebi has ruled that Category II alternative investment funds (AIFs) investing in listed debt securities rated 'A' or below will now be treated as investments in unlisted securities. This adjustment is intended to enhance compliance with minimum investment conditions amidst recent regulatory changes concerning listed securities.

(With inputs from agencies.)