The Securities and Exchange Board of India (SEBI), India’s capital markets regulator, has issued a circular on the use of brand names or trade names by Investment Advisers (IAs) and Research Analysts (RAs), following its previous publication of an extensive set of guidelines for advertisements issued by these entities.
- The provisions of the circular will take effect on May 1, 2023.
SEBI issued this circular in the exercise of powers granted under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in the securities market and to promote the growth and regulation of the securities market.
Key Points:
i.Few IAs and RAs have been found by SEBI to be advertising their services using their brand name/trade name/logo more prominently than their name as registered with SEBI in their advertisements, websites, publications, correspondence with clients, and other documents.
ii.The brand name/trade name/logo may or may not be associated with the name of IA/RA as registered with SEBI, and so may mislead and confuse investors.
iii.Despite the fact that IAs and RAs are still permitted to use the brand name/trade name/logo, SEBI has published some recommendations to maintain transparency.
iv.The name of the IA/RA as registered with SEBI, its logo, its registration number, and its complete address with phone numbers must be prominently displayed on the portal or web site, if any, on notice boards, display boards, advertisements, publications, know your client forms, and client agreements.
v.Additionally, SEBI has enforced the inclusion of the following disclaimer: SEBI registration, membership in BSE Administration & Supervision Ltd. (BASL) [in the case of IAs], and certification from NISM (National Institute of securities market) in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
vi.Furthermore, SEBI has prohibited IAs and RAs from using its logo.
Click here for official circular.
Advertisement Code for Investment Advisers (IA) & Research Analysts (RA)
SEBI has released new rules on the advertisement code for IAs and RAs, as well as enforced their compliance with the advertisement code, in order to further enforce the conduct of IAs and RAs when releasing any advertisement.
The code of conduct for IAs and RAs is outlined in the following regulations:
- Securities and Exchange Board of India (Investment Advisers) Regulations, 2013
- Securities and Exchange Board of India (Research Analysts) Regulations, 2014
The provisions of this circular will take effect on May 1, 2023.
- SEBI issued this circular in the exercise of powers granted under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in the securities market and to promote the growth and regulation of the securities market.
Key Points:
i.SEBI has urged all of its registered IAs and RAs to guarantee compliance with its decision on the advertisement code, which covers three basic areas: forms of communication, disclosures in advertisements, prohibitions in advertisements, and other compliances or obligations.
ii.The code would apply to all forms of communication, including pamphlets, circulars, brochures, notices, research reports, and written content intended for use in publications or displays, such as newspapers, magazines, books, signboards, mail, text messages, messaging apps, etc., that may have an impact on investment choices.
iii.Communication channels may also include social media platforms, radio, telephone, television, tape recording, or any other type of internet communication.
iv.Additionally, it has mandated that IAs and RAs provide information in their advertisements about their registered office addresses, membership status, registration number, logo, and brand name, among other things.
Click here for official circular.
Recent Related News:
In March 2023, the Securities and Exchange Board of India (SEBI) took a number of decisions at its board meeting on March 29, 2023, with the goal of protecting investors’ interests and bolstering the market infrastructure to handle disruptions.
i.The announcements at the meeting, which included 17 items, were by far the largest number in recent history.
ii.17 announcements include 16 major decisions and approval of SEBI budget estimates for the fiscal year 2023–2024 (FY24).
About the Securities and Exchange Board of India (SEBI):
Chairperson– Madhabi Puri Buch
Headquarters– Mumbai, Maharashtra
Establishment– 1992
