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SEBI mulls SRO for investment advisers

Topics Covered:

  1. Statutory, regulatory and various quasi-judicial bodies.

 

SEBI mulls SRO for investment advisers

 

What to study?

  • For Prelims: SRO- objectives, composition and functions.
  • For Mains: Need, significance of SRO and challenges ahead.

 

Context: The Securities and Exchange Board of India (SEBI) has proposed a self-regulatory organisation (SRO) for the growing number of investment advisers to address issues related to the quality of advice given to investors by such entities.

 

Key facts:

  1. SRO is the first-level regulator that performs the crucial task of regulating intermediaries representing a particular segment of securities market on behalf of the regulator. It would be seen as an extension of the regulatory authority of the SEBI and would perform the tasks delegated to it by the SEBI.
  2. The role of SRO is developmental, regulatory, related to grievance redressal and dispute resolution as well as taking disciplinary actions.
  3. The regulator has proposed a governing board with at least 50% public interest directors along with 25% representation each of shareholder directors and elected representatives.
  4. Further, the governing board can appoint a managing director or chief executive officer to manage the daily affairs of the SRO.

 

Need:

SEBI was in receipt of a large number of complaints alleging charging of exorbitant fees, assurance of returns, misconduct etc. by investment advisers. Given the growth in this segment of the market, it was felt that the time is appropriate to initiate the formation of an SRO.

 

Sources: the hindu.