SEBI Seeks Public Comments on Draft Investor Charter for RTAs, RAs, and IAs

The Securities and Exchange Board of India (SEBI) on Friday, April 11, 2025, invited public comments on a draft proposal to review the investor charter for Registrars to Issue and Share Transfer Agents (RTAs), Research Analysts (RAs), and Investment Advisers (IAs). The goal is to bolster financial consumer protection and promote investor literacy.

Proposed Charter to Outline Key Roles and Responsibilities

In its three separate draft circulars, SEBI emphasised that the investor charter should provide detailed insights into the activities of RTAs, RAs, and IAs, helping investors better understand the services they offer. The charter will also outline key “Dos and Don’ts” for investors engaging with these intermediaries.

For RTAs, the charter will include services such as Know Your Customer (KYC) updates, share transmission, dividend processing, and corporate actions like Employee Stock Option Plans (ESOPs) and bonus issues, with defined timelines ranging from 15 to 30 days.

Enhancing Transparency and Grievance Redressal Mechanisms

In a move to improve transparency and investor services, all registered RTAs will be required to publish monthly data on complaints received and their resolution status on their websites by the 7th of each month. This will ensure a higher level of accountability and faster grievance redressal.

The proposal also aligns with advancements in grievance redressal platforms such as SCORES 2.0 and the Online Dispute Resolution (ODR) platform, designed to make investor service processes more efficient.

Stronger Guidelines for Research Analysts and Investment Advisers

The investor charter for RAs aims to maintain high standards of disclosure and offer unbiased recommendations. RAs must disclose financial interests in the recommended securities and inform clients about any material conflicts of interest. Furthermore, RAs are required to provide clear guidance when offering recommendations on complex and high-risk financial products.

For IAs, the charter highlights the importance of a transparent client onboarding process, unbiased risk profiling, and the full disclosure of business models, affiliations, and compensation structures. IAs will also need to ensure that there is no discrimination in service quality among clients opting for similar offerings.

Empowering Investors and Promoting Awareness

The proposed investor charter is designed to empower investors with essential rights, including the ability to exit services, seek fair grievance redressal, and be informed about the integration of Artificial Intelligence (AI) in advisory processes. All registered RTAs, RAs, and IAs will be required to disseminate the investor charter through their websites, emails, and display it prominently at their offices.

Public Comments Invited Until May 2

SEBI has invited public comments on the proposals, with the deadline set for May 2, 2025. The regulator aims to gather feedback to finalise the charter and ensure that it is comprehensive and effective in safeguarding investor interests.

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.