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Yes you don’t need to register the whole company by following necessary guidelines by sebi automated investment advice can be made. Under IA Regulations, there is no express prohibition for use of automated advice tools by SEBI registered investment advisers. The risk profiling of the investor is mandatory and all investments on which
In...
W Network
caHello, We are a registered private limited 'Software Company'. Our software product deals with automated personal financial/investment advisory. As per the SEBI regulations of 2013, anyone giving investment advise to people needs to get a license from SEBI to become an 'Investment Adviser'. (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1358779330956.pdf). One of our director fulfills all the criteria to get a license. Our confusion is to take a license as an 'Investment Advisory Firm' or take an individual license for one our director who qualifies for it. In both the cases, the investment Advisor if going to be a single person (that director) only. Following are our questions regarding this: 1) We don't want to register our whole company as 'Investment Adviser' as only one of the director is going to have the license. So, it does not make sense to pay a very high amount of fees for that licence. How can we work this out legally? We want our Director to take the individual license and then use our Software Product to advise. The Advise will be finally signed by the Director as an individual Investment Adviser (not on behalf of the company). Can we work like this?
-
W Network
caYes you don’t need to register the whole company by following necessary guidelines by sebi automated investment advice can be made. Under IA Regulations, there is no express prohibition for use of automated advice tools by SEBI registered investment advisers. The risk profiling of the investor is mandatory and all investments on which
Investment advice is provided shall be appropriate to the risk profile of the client. IA regulations have also specified that where tools are used for
Risk profiling, it should be ensured that the tools are fit for the purpose and any limitations are identified and mitigated. The records pertaining
To risk profiling and risk assessment of the client and suitability assessment of the advice being provided shall have to be maintained by
The investment adviser for a period of five years.
It is proposed that the investment advisers providing online investment advisory services using automated tools, shall ensure the following
Compliance requirements in addition to the compliance with the existing provisions of IA Regulations:
- ensuring that the automated tools used are fit for the purpose;
- Robust systems and controls to be in place to ensure that any advice
Made using the tool is in the best interest of the client and suitable
For the clients;
iii. Automated tool is to be used only for the target clients, for which
It is designed;
- Disclosure to the clients in relation to how the tool works and its
Limitations of the outputs it generates;
- comprehensive system audit requirements are put in place;
- Investment adviser using the tool shall be held responsible for the
Advice;
vii. The automated tools used by the advisers shall also be subject to
Audit and inspection.
You can also try appointing research analyst In terms of RA Regulations, “research analyst” means a person who is primarily
Responsible for and any associated person who reports directly or indirectly to such a research analyst in connection with, preparation and/or publication of
substance of research report or who provides research report or who makes 'buy/sell/hold’ recommendation of a security or give price target of a security
Or offers an opinion concerning public offer or securities that are listed or to be listed and are traded or to be traded in a Indian stock exchange whether or
Not any such person has the job title of "research analyst" and includes any other entities engaged in issuance of research reports or research analysis. It is observed that many persons are getting themselves registered as research analyst instead of investment adviser in order to avoid various compliance requirements specified in IA Regulations such as suitability of the recommendation, risk profiling, etc. They are providing stock specific
Recommendations and/or research services to investors through different subscription packages such as mid cap, small cap, sector specific research. In
Such cases, they are sending recommendations only through SMSs or e-mails and are not sending the research report with disclosures as specified in RA
Regulations to the clients. The responsibility to choose the appropriate package lies with the subscriber/client. It is difficult for retail investors to understand
Whether the said subscription package is suitable for them and whether it is in their best interest.
'Get a Wazzeer' to have an expert take care of the complete process for you.
over 3 years ago
View answer
Hello, We are a registered private limited 'Software Company'. Our software product deals with automated personal financial/investment advisory. As per the SEBI regulations of 2013, anyone giving investment advise to people needs to get a license from SEBI to become an 'Investment Adviser'. (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1358779330956.pdf). One of our director fulfills all the criteria to get a license. Our confusion is to take a license as an 'Investment Advisory Firm' or take an individual license for one our director who qualifies for it. In both the cases, the investment Advisor if going to be a single person (that director) only. Following are our questions regarding this: 1) We don't want to register our whole company as 'Investment Adviser' as only one of the director is going to have the license. So, it does not make sense to pay a very high amount of fees for that licence. How can we work this out legally? We want our Director to take the individual license and then use our Software Product to advise. The Advise will be finally signed by the Director as an individual Investment Adviser (not on behalf of the company). Can we work like this?
-
W Network
caYes you don’t need to register the whole company by following necessary guidelines by sebi automated investment advice can be made. Under IA Regulations, there is no express prohibition for use of automated advice tools by SEBI registered investment advisers. The risk profiling of the investor is mandatory and all investments on which
Investment advice is provided shall be appropriate to the risk profile of the client. IA regulations have also specified that where tools are used for
Risk profiling, it should be ensured that the tools are fit for the purpose and any limitations are identified and mitigated. The records pertaining
To risk profiling and risk assessment of the client and suitability assessment of the advice being provided shall have to be maintained by
The investment adviser for a period of five years.
It is proposed that the investment advisers providing online investment advisory services using automated tools, shall ensure the following
Compliance requirements in addition to the compliance with the existing provisions of IA Regulations:
- ensuring that the automated tools used are fit for the purpose;
- Robust systems and controls to be in place to ensure that any advice
Made using the tool is in the best interest of the client and suitable
For the clients;
iii. Automated tool is to be used only for the target clients, for which
It is designed;
- Disclosure to the clients in relation to how the tool works and its
Limitations of the outputs it generates;
- comprehensive system audit requirements are put in place;
- Investment adviser using the tool shall be held responsible for the
Advice;
vii. The automated tools used by the advisers shall also be subject to
Audit and inspection.
You can also try appointing research analyst In terms of RA Regulations, “research analyst” means a person who is primarily
Responsible for and any associated person who reports directly or indirectly to such a research analyst in connection with, preparation and/or publication of
substance of research report or who provides research report or who makes 'buy/sell/hold’ recommendation of a security or give price target of a security
Or offers an opinion concerning public offer or securities that are listed or to be listed and are traded or to be traded in a Indian stock exchange whether or
Not any such person has the job title of "research analyst" and includes any other entities engaged in issuance of research reports or research analysis. It is observed that many persons are getting themselves registered as research analyst instead of investment adviser in order to avoid various compliance requirements specified in IA Regulations such as suitability of the recommendation, risk profiling, etc. They are providing stock specific
Recommendations and/or research services to investors through different subscription packages such as mid cap, small cap, sector specific research. In
Such cases, they are sending recommendations only through SMSs or e-mails and are not sending the research report with disclosures as specified in RA
Regulations to the clients. The responsibility to choose the appropriate package lies with the subscriber/client. It is difficult for retail investors to understand
Whether the said subscription package is suitable for them and whether it is in their best interest.
'Get a Wazzeer' to have an expert take care of the complete process for you.
over 3 years ago
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