May 03, 2024
RAASB and IAASB: Supervisory Bodies for Research Analysts and Investment Advisors
The Securities and Exchange Board of India (SEBI) has introduced a framework for the administration and supervision of Research Analysts (RAs) and Investment Advisers (IAs). This framework encompasses the establishment of RAASB (Research Analyst Administration and Supervisory Body) and IAASB (Investment Adviser Administration and Supervisory Body), along with regulatory guidelines for their operation.
Background:
SEBI, in accordance with Regulation 38A of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, notified on April 26, 2024, allows recognized Stock Exchanges to undertake the activities of administration and supervision over specified intermediaries. This includes Research Analysts and Investment Advisers. Consequently, Stock Exchanges are now recognized as RAASB and IAASB for the administration and supervision of RAs and IAs, respectively.
Operationalization and Timeline:
The circular, effective from July 25, 2024, outlines the criteria for the recognition of Stock Exchanges as RAASB and IAASB. Minimum requirements include the number of years of existence, net worth, nationwide presence, and investor service capacity. A detailed framework is provided in Annexure I.
Roles and Responsibilities of RAASB and IAASB:
Registration Approval: RAASB and IAASB are responsible for the initial scrutiny and approval of registration applications of RAs and IAs, as well as post-registration applications for changes in various particulars.
Supervision: These bodies monitor the activities of RAs and IAs, ensuring compliance with regulations and addressing grievances through appropriate mechanisms.
Enforcement Actions: RAASB and IAASB have the authority to take administrative actions, including penalties and warnings, against RAs and IAs found to be in violation of regulatory norms.
Inspection: RAASB and IAASB conduct both on-site and off-site inspections of RAs and IAs to ensure adherence to regulatory requirements and ethical standards.
Enlistment of RAs and IAs:
Under the amended regulations, RAs and IAs are required to enlist with RAASB and IAASB, respectively. Existing RAs/IAs are deemed to be enlisted, while new applicants must fulfill the enlistment criteria.
Efficiency Measures:
To streamline processes and promote efficiency, RAASB and IAASB are merged into a single Stock Exchange initially. Additionally, a single window clearance system is proposed for individuals registered as both RAs and IAs.
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