Investors in India will soon be able to rely on independently verified performance data of market intermediaries such as investment advisers, research analysts, stock brokers and other registered entities, with market regulator Sebi rolling out the Past Risk and Return Verification Agency (PaRRVA), a mechanism to showcase verified past returns to investors.

Sebi chairman Tuhin Kanta Pandey said that several international jurisdictions recognise the risks of unverified performance claims in securities markets, but India has “taken the lead” to establish an independent mechanism to validate these claims.

Launched in partnership with the National Stock Exchange and CARE Ratings, the framework connects a Sebi-registered credit rating agency acting as PaRRVA with a recognised stock exchange serving as the PaRRVA Data Centre (PDC). Together, they will independently verify past returns, using a standardised methodology, and will be monitored by an oversight committee. Initially, it is being operationalised for intermediaries who provide algorithmic trading services.

Highlighting the need for the framework, Pandey said performance reporting in securities markets has long posed risks for investors, with finfluencers often luring investors with exaggerated or fabricated returns.

“Sebi-registered intermediaries such as stock brokers, IAs and RAs cannot refer to past performance, making it difficult to establish their credentials. Meanwhile, unregistered entities make unverified claims, drawing investors away from regulated intermediaries. Well-regulated entities struggle to attract investors despite genuine track records,” said Pandey.

Citing a survey from the market regulator, the Sebi chief said only 36 per cent of investors possess adequate knowledge about the securities market, making them vulnerable to unverified claims, while nearly 62 per cent of investor decisions are based on finfluencer recommendations.

“For investors, PaRRVA gives clarity and confidence. PaRRVA, in due course, will provide investors with credible performance data related to investment services offered to them. For regulated entities, PaRRVA will provide a platform to showcase genuine performance to clients,” he said.

“PaRRVA is an important Sebi-led step towards strengthening transparency, standardisation and investor confidence in performance-related disclosures. The NSE is pleased to support this initiative by providing the PaRRVA Data Centre (PDC), enabling the framework to leverage authenticated market data for robust risk and return verification. This will enhance trust in the ecosystem and help investors make more informed decisions,” said Ashishkumar Chauhan, MD and CEO, NSE.

Mehul Pandya, MD and group CEO, CARE Ratings, said PaRRVA’s independent validation framework will ensure they receive accurate, standardised and unbiased performance information.

The Sebi chairman also said the regulator will soon amend rules to bar the use of live market data for investor education, following the penalty and disgorgement order of ₹546 crore against fininfluencer Avadhut Sathe. Pandey stressed there is no regulatory vacuum and attributed concerns to a lack of understanding, reiterating that Sebi’s rules prohibit providing stock tips.

He acknowledged inconsistencies between two Sebi circulars on the educational use of live data and said the regulator will correct them so that only past market data is used.