SEBI may Bar Investment Advisors from Selling Financial Products..! - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Friday, January 05, 2018

SEBI may Bar Investment Advisors from Selling Financial Products..!

SEBI may Bar Advisors from Selling Financial Products..!

MARKET REGULATOR RELEASES DISCUSSION PAPER

The Securities and Exchange Board of India (SEBI) has decided to give its earlier plan to split the role of an investment advisor and distributor a renewed push.

The capital markets regulator, in a discussion paper released on Tuesday, proposed that entities and individuals, who register as investment advisors, will not be able to sell financial products. The move is likely to find opposition among distributors and brokers, who have argued that the move could impact their business.

Mutual funds are likely to lend their informal support to these intermediaries as the step could impact flows into their products

“There should be clear segregation between the two activities of the entity i.e providing investment advice and distribution of the investment products and execution of investment transactions,” said the discussion paper seeking public comments by January 23, 2018.

The regulator said banks, nonbanking finance companies (NBFCs) and corporates who register as investment advisers will not be able distribute financial products either directly or through holding or subsidiary company.
The regulator said individuals registered as investment advisers too should not distribute financial products either directly or through immediate relatives.
Individuals providing distribution services will not be able to provide advice for investing in financial product. Similarly, banks, NBFCs, corporates, LLPs and firms providing distribution services shall not provide investment advice in financial products either directly or through holding or subsidiary company, the paper said.

“The guideline is impractical. This regulation cannot work in a country like India, where investors do not pay for advice,” said the chief executive of a large asset management company. “In a country like the UK, after introducing the advisory model, the cost of advice for the lower strata of society has gone up.”

SEBI said existing registered investment advisers who are offering distribution services through immediate relatives or subsidiary company should choose among providing investment advice or distribution services before March 31.
“From April 01,2019, any person, including their immediate relatives or holding or subsidiary company shall offer either investment advice or distribution services,” SEBI said.


This is the third discussion paper by SEBI to split the rules. The first one was in October 2016, while the second version was floated June 2017.
SEBI may Bar Investment Advisors from Selling Financial Products..! Reviewed by S. Chitra on January 05, 2018 Rating: 5 SEBI may Bar Advisors from Selling Financial Products..! MARKET REGULATOR RELEASES DISCUSSION PAPER The Securities and Exchange Boa...

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