SEBI Eases Compliance Rules for Research Analysts and Investment Advisors

In a significant move to streamline compliance for Research Analysts (RAs) and Investment Advisors (IAs), SEBI has relaxed certain requirements, particularly regarding the communication of the Most Important Terms and Conditions (MITC). The decision aligns with industry feedback and aims to improve the ease of doing business for market professionals.

Simplified Compliance for MITC Communication

SEBI’s latest circulars, issued on 17 February, outline a standard format for MITC that RAs and IAs must share with existing clients by 30 June 2025. The regulator has now permitted communication through email or any other mode that can be preserved, removing the earlier requirement for physical or digital signatures for confirmation.

For new clients, however, RAs and IAs must integrate the MITC into their service agreements, disclose all terms upfront, and obtain consent via physical or e-signatures. This move follows earlier reports suggesting that SEBI was considering easing certain compliance requirements based on industry concerns.

Fee Regulations and Proposed Changes

The MITC also sets limits on fees, specifying the maximum annual charges per family and the permitted advance fee collection periods—three months for RAs and six months for IAs. However, following industry pushback, SEBI has released a consultation paper proposing to extend this period to a year.

This revision reflects SEBI’s ongoing efforts to balance investor protection with regulatory flexibility, addressing concerns raised by market participants.

Conclusion

By easing compliance norms and reconsidering fee collection limits, SEBI aims to create a more efficient regulatory environment for RAs and IAs

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.