SEBI eases rules for RAs, IAs; okays email confirmation from existing clients for Most Important T&C

With new clients, RAs and IAs have to get their consent signed either in person or through an e-signature facility.

The market regulator has said that the Most Important Terms and Conditions (MITC) of service can be informed to the existing clients of Research Analyts (RAs) and Investment Advisors (IAs) via an email or any other mode of communication that can be preserved.

This is a confirmation of the news that Moneycontrol had written on February 5, which said that the regulator was reconsidering some of the guidelines issued to RAs after the latter had raised ease-of-doing-business concerns. Sources had informed Moneycontrol that the regulator may allow RAs to forgo physical or digital signature of clients for confirmation of MITC, and allow them to send an email to clients instead.

Also read: MC Exclusive| Research Analysts likely to get relief on advance fee collection, limit may rise from 3 months to a year: Sources

Through circulars issued on February 17, the Securities and Exchange Board of India (SEBI) has issued the standard format for MITC for RAs and IAs.

The circular issued for RAs stated, "For existing clients, the MITC shall be informed by the RAs to their clients via email or any other suitable mode of communication (which can be preserved) by June 30, 2025." The same directive has been given for IAs as well.

For new clients, RAs and IAs have to incorporate the MITC into the 'Terms and Conditions' of providing their services, should disclose the entire T&C to the clients and get their consent in the form of a signature collected in person or through an e-signature facility.

The MITC for both IAs and RAs give the maximum amount of fee they can collect per annum per family, and the maximum period for which they can collect the advance fee.

The period for which RAs can collect fee in advance is 3 months and for IAs is six months, according to these circulars. But the regulator has floated a consultation paper to extend this period to a year following strong protests from both registered entities.