Markets regulator Sebi on Monday asked research analysts (RAs) and investment advisers (IAs) to disclose the most important terms and conditions of their services to clients.
These conditions, known as Most Important Terms and Conditions (MITC), are required to be standardised by the Industry Standards Forum in consultation with Sebi and the Research Analyst Administration and Supervisory Body (RAASB) or Investment Adviser Administration and Supervisory Body (IAASB), according to two separate circulars.
Sebi said RAs are required to inform existing clients of the MITC by June 30, 2025 through email or another mode that can be preserved.
Further, new clients need to sign agreements, including MITC.
RAs should comply with Sebi's regulations on conflict of interest and ensure no guaranteed returns schemes are offered.
Fees charged to clients should not exceed the prescribed limits and should be paid through valid methods such as bank transfer or UPI.
"The current fee limit under Fixed Fee mode is Rs 1,51,000 per annum per family of client. Under Assets under Advice (AUA) mode, maximum fee limit is 2.5 per cent of AUA per annum per family of client," Sebi said.
RAs and IAs cannot guarantee profits or risk-free investments. Any investment is subject to market risks.
Also, Sebi asked investment advisers (IAs) to include MITC in investment advisory agreements with clients.
They must clarify that they only offer advice, not execute trades without the client's specific consent.
Fees for investment advisory services have prescribed limits, and clients must be informed of these limits.
IAs can charge fees in advance, but these must not exceed the duration set by Sebi, and clients can get a refund if services are terminated early.
The circulars would be effective immediately.
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