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Model Portfolios and Research Analysts

There has always been a confusion on drawing a line between services which can be offered by Research Analysts and Investment Advisors. The confusion was in principle in offering Model Portfolio services. Who is permitted to provide the services, whether it is research analysts or investment advisers or both?

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New Class of Investors – Accredited Investors

SEBI has notified and classified a new class of investors as Accredited Investors thereby raising of funds and investment in the various products may be expected to go up with lesser regulatory restrictions. SEBI earlier had issued consultation paper on the concept of Accredited Investors in the month of February, the concept is already established in the foreign countries, where the accredited investors are high-net-worth investors permitted to invest in unregulated or less-regulated investment products.

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Informal Guidance by SEBI on Queries of Paytm

SEBI's Informal Guidance Scheme is introduced by SEBI in-order to ensure better regulation and development of the securities market. Under the scheme, guidance may be sought by the registered intermediaries by way of No-action letters or No-interpretative letter. The guidance issued by SEBI doesn't constitute only as a view and doesn’t constitute as a conclusive decision or as an ‘Order’ under the regulations of SEBI.

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Membership with BASL for Investment Advisers

With the frequency of amendments in the SEBI (Investment Advisers) Regulation, 2013 in recent times one can opine that the regulatory compliance would be the need of the hour for the Investment Advisors (IAs). Self-Regulatory Organization (SRO) is under the limelight for the past one year and now SEBI has recognized BSE Administration and Supervision Ltd. (BASL) a wholly owned subsidiary of BSE Ltd as Investment Adviser Administration and Supervisory Body (IAASB).

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Performance Reporting & Benchmarking by Portfolio Manager

A Portfolio Manager is required to disclose to its clients the performance of the Portfolio Manager periodically. SEBI has issued new directions regarding Performance Benchmarking and Reporting of Performance by Portfolio Managers vide circular dated December 16, 2022, which will come into effect from 1st April 2023.

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Execution Only Platforms

Direct plans for the Mutual Funds were introduced by SEBI in January 2013. Since then, for any entity to provide services in execution for investments like investing, redeeming, switching and tracking the performance of the investments by getting the feeds from RTA, the entity had to register itself as an Investment Advisor or a stock-broker and comply with all the regulations applicable to them.

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Model Portfolio and Basket of Securities

There has always been confusion on drawing a line in principle in offering Model Portfolio services by Research Analysts. Whether they are permitted to provide the Model Portfolio Services or not eligible to provide? There's one Settlement Order which was issued in May 6th 2022 wherein question was raised on providing model portfolio services by a Research Analyst. However, SEBI in its informal guidance issued on 5th April 2023, mentioned that making recommendation in respect a basked comprising more than one security is considered as Research Report as per Research Analyst Regulations.

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