New Rules to Strengthen Investor Protection, Transparency by SEBI    

Research analysts and investment advisers under SEBI have new guidelines introduced tracking protection of the investor, compliance, utilizing AI, and segregation of clients.

The Board of Securities and Exchange in India have released a several new regulations to facilitate investor protection and to be more transparent in application with research analysts (RAs) and investment advisers (IAs). Market analysis shows that these new rules come forth alongside notification of RA and IA rules in December 2024 in the line of qualification standards, fee structures, client segregation and deposit requirements.

The revised framework will obligate research analysts to keep deposits according to client number ranging between Rs 1 lakh and Rs 10 lakh for extra security, whereas, in the case of investment advisers, it adopts a tiered deposit system with the old advisers to comply by June 2025.

The study of the markets by SEBI also introduces some new compliance requirements upon entities using artificial intelligence (AI) in their services such as disclosures about the AI, security of data, and abiding by prescribed rules. Also, the guidelines focus on advisory-distribution functions segregation and transparency between the advisory and distribution functions to prevent conflicts of interest in client services.