SEBI issued a circular detailing an interim arrangement for certified past performance verification of Investment Advisers (IAs) and Research Analysts (RAs) before the full operationalization of the Past Risk and Return Verification Agency (PaRRVA). This move enhances transparency and credibility in financial advisory services.
The Securities and Exchange Board of India (SEBI) has issued a significant circular establishing an interim framework for certifying the past performance of Investment Advisers and Research Analysts ahead of the full operationalization of PaRRVA (Past Risk and Return Verification Agency). The circular aims to curb misleading claims about past returns, ensuring that only verified performance metrics are disclosed in advertisements and communications by regulated entities.
PaRRVA, a SEBI-recognized entity, will verify risk-return metrics, and its data will be hosted by recognized stock exchanges acting as PaRRVA Data Centres. The circular mandates strict eligibility criteria for entities acting as PaRRVA, including a minimum operational history, net worth, and grievance redressal mechanisms.
The interim arrangement will function as a pilot to test and fine-tune the verification process while preserving investor protection through clear disclaimers indicating that past performance is not an assurance of future returns. The framework fosters industry-wide transparency and empowers investors to make more informed decisions based on credible data.
Key Highlights:
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Interim certification of past performance pre-PaRRVA operationalization
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Verifies risk-return metrics of Investment Advisers and Research Analysts
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Certified data hosted by PaRRVA Data Centres (recognized stock exchanges)
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Eligibility criteria include operational history, net worth, and grievance redressal
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Pilot phase to refine verification, with strict disclosures about limitations
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Enhances credibility and transparency in financial advisory communications
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Strengthens investor protection and informed decision-making
Sources: SEBI official circular, TaxGuru, AngelOne, FinSecLaw, SEBI website