The Securities and Exchange Board of India (SEBI) has introduced a Centralized Fee Collection Mechanism aimed at improving transparency and efficiency in fee payments for Investment Advisers (IAs) and Research Analysts (RAs). Announced on Friday, this initiative seeks to streamline the payment process, allowing clients to remit fees through a designated platform managed by an authorized Administration and Supervisory Body (ASB).
The new system, which will be operational starting October 1, provides a formal channel for fee payments. Clients will have the option to use this centralized platform to ensure transactions are secure, transparent, and linked directly to registered IAs and RAs. While the mechanism is optional, it is expected to create a clear differentiation between registered and unregistered entities, offering significant benefits for both investors and legitimate advisors.
This initiative comes as part of SEBI’s ongoing efforts to address rising concerns about unregistered entities misleading investors. Many of these entities pose as legitimate IAs and RAs, offering unrealistic returns and failing to comply with essential regulatory requirements, such as Know Your Customer (KYC) norms. By introducing this centralized system, SEBI aims to safeguard investors from fraudulent activities and enhance trust in the advisory and research sectors.
As per SEBI’s announcement, the BSE Ltd will define the operational framework for the mechanism by September 23, ahead of the official rollout in October. This framework will detail how fees are collected, processed, and disbursed, ensuring clarity and accountability throughout the transaction process. The centralized platform will allow clients to verify the registration status of their advisors, helping them make informed decisions.
Overall, SEBI’s move aligns with its broader mandate to strengthen investor protection and promote ethical practices in the financial advisory space. By offering this optional mechanism, SEBI hopes to encourage more transparent and structured fee collection while enhancing the credibility of registered advisors in the market.
Summary:
- SEBI has launched a Centralized Fee Collection Mechanism for Investment Advisers and Research Analysts, effective from October 1.
- The system aims to enhance transparency and protect investors from unregistered entities offering misleading services.
- BSE Ltd will outline the operational framework by September 23 to guide the platform’s usage.