After much pulsations finally when the dust has started settling, SEBI has come out with a new amendment in IA regulation. SEBI has come out with another amendment, Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2021 on January 13, 2021. The said amendment primarily is regarding the reduction of application, registration and renewal fees for Investment Advisers.

Fee structure as applicable in comparison to the old fee structure is as below:

Vide press release no PR No.: 61/2020 SEBI published the minutes of board meeting dated December 16, 2020.  Point IV with respect to the Amendment to SEBI (Investment Advisers) Regulations, 2013 of the said press release is as below:

“The Board approved amendment to SEBI (Investment Advisers) Regulations, 2013 (IA Regulations) requiring Investment Advisers (IA) to seek membership of a body recognised by SEBI for administration and supervision of IAs under IA Regulations. The Board also approved modification to the structure of fees payable  by  IAs,  while  ensuring  that  the  total  cost  borne  by  IAs  towards  fees remains same as that payable by IAs under the present IA Regulations.”

The said minutes had a clue inherent in it, that the Board had approved modification to the structure of fees payable  by  IAs,  while  ensuring  that  the  total  cost  borne  by  IAs  towards  fees remains same as that payable by IAs under the present IA Regulations. It points out to the fact that there is much more to the amendment which has come.

On first look, it seems to be relief to the Investment Advisory fraternity. However, this amendment needs a closer look as to ascertain the real motive behind the same. Now, the Investment Advisors would be required to seek membership of a body recognised by SEBI for administration and supervision of IAs under IA Regulations.

Reading the amendment and board meeting minutes in conjunction to each other, gives a hint that now that SEBI has reduced its fee structure, its primarily to compensate the Fees IAs would have to bear for the membership of the  body recognised by SEBI, which is yet to be formalized.

So we need to be ready for second news from SEBI regarding the announcement of said body that would be administering and supervising the Investment Advisory Fraternity. The introduction of first level regulator would change the regulatory landscape for IA’s. Now that the administration and supervision of IA’s would be through a separate entity all together, the compliance with provisions of IA regulations would become all the more important. For now, we can only speculate the outcome of this move, only time would tell the real implication of such move by SEBI.

Given the current scenario, we would once again recommend you to have a relook at the process of compliance followed by your organization and to be ready before the storms hits the shore.