Sebi announces a centralised fee-collection platform for IAs, RAs; says it is optional for now

Under this, clients can pay IAs or RAs, through a designated platform or portal administered by a recognised administration and supervisory body (ASB).

The market regulator has announced the launching of a Centralised Fee Collection Mechanism (CeFCoM) for registered investment advisors (IAs) and research analysts (RAs), on an optional basis.

Under this, clients can pay IAs or RAs, through a designated platform or portal administered by a recognised administration and supervisory body (ASB).

In a circular issued on September 13, the Securities and Exchange Board of India (Sebi) said that BSE Ltd will specify the operational framework for the mechanism before September 23, 2024, and make it operational from October 1, 2024.

The circular said that the mechanism has been co-created by BSE Limited with the help of various stakeholders.

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The circular said that the intent was to help investors be sure that they are paying a registered intermediary, whether an IA or an RA.

The circular stated, "With the growing interest in the securities market, there is a need for a mechanism for an investor to discern whether payment of fees is being made only to a registered IA/RA. In order to create a closed and transparent payment ecosystem, consultations were held with relevant stakeholders on the proposal of a separate centralised mechanism for fee collection by IAs and RAs."

The regulator said that while the use of this platform for collecting fees through this mechanism is optional for now, the ASB should take steps to encourage clients and registered IAs and RAs to avail the services of this mechanism.

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In the circular, Sebi also urged IAs and RAs to encourage clients to use this fee-payment mechanism.

This circular stated that it was being issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with regulation 14 and regulation 15A of SEBI (Investment Advisers) Regulations, 2013 and SEBI (Research Analysts) Regulations, 2014 to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.