[By Anikait Chawla and Chinmaya Saraswat]
The authors are students of Gujarat National Law University
On 7 August 2025, the Securities and Exchange Board of India released a consultation paper called, “Proposals for Ease of Doing Business for Investment Advisers and Research Analysts” (the Paper). The Paper aims to lower procedural barriers for advisers and analysts while keeping investor protections in place. It builds on changes from December 2024 that gave advisers more fee flexibility and cleared up onboarding steps. The Paper addresses six persistent market concerns: the limited ability to share past performance, unclear rules on second-opinion services, short corporatization timelines, narrow qualification criteria, and repetitive documentary checks. SEBI tied these easing measures to safeguards such as certification, disclaimers and time limits. The regulator wants to make life easier for advisers while keeping verification where it matters.
1.Regulatory backdrop and principal proposals
The Investment Advisers Regulations, 2013 (IA) and the Research Analysts Regulations, 2014 (RA) set rules for who may advise, how research should be published, and what disclosures advisers must make. Those rules helped professionalise a market that had relied on informal practice. As advisory work evolved, the rules showed strain. Firms and solo advisers report repeated documentary checks, academic thresholds that block experienced practitioners, and disruption when individuals convert to a corporate form. Small advisers feel these burdens most because they lack in-house compliance teams.
SEBI responds with a significant change aimed at broadening eligibility. Any graduate could register if they pass the relevant NISM exam. That keeps a baseline of competence while allowing more professionals to enter the market. The Paper would permit one-to-one sharing of certified past-performance data when a prospective client requests it. Advisers may present certified results to interested clients, with mandatory disclaimers and a time-limited allowance. The approach lets advisers show a genuine track record without enabling mass-market promotion of unverified returns.
The Paper also formalises second-opinion services. Advisers often give informal second opinions on products distributed by others. SEBI would let advisers charge for those services within capped arrangements and with clear disclosure. The Paper references a 2.5 percent ceiling as a guardrail. It also proposes annual consent for ongoing fee arrangements so clients stay informed about layered charges.
On corporatization, SEBI proposes a longer transition window and limited client onboarding during conversion. The current short period often forces advisers to pause or alter services. Extending the window, while requiring continued professional-liability cover and client notice, aims to smooth the process without reducing accountability.
Additionally, the Paper aims to prune redundant documentary checks. Repeated proofs of address, multiple credit reports and duplicate tax submissions add time and cost without improving oversight. SEBI suggests replacing many routine checks with digital verification, sworn declarations and targeted spot checks. That approach redirects supervisory effort toward risks that matter for investors.
Taken together, these measures show SEBI trying to reduce admin friction while keeping guardrails. Certification, templates and sunset clauses serve as those guardrails. The outcome depends on how precise and operable the implementing rules become.
2.Implementation challenges and standardisation requirements
The reforms will succeed only if SEBI provides clear technical guidance and reasonable timelines, beginning with standardisation, since past-performance disclosures help clients only when advisers calculate and report returns uniformly.. SEBI should mandate a template that shows one-, three- and five-year gross returns, the corresponding net returns after fees, the benchmark used for each period, start and end dates, and a short note on the calculation method. The template should explain how to treat cash flows and whether to use time-weighted or money-weighted returns. It should also describe how to present multi-asset strategies. Without that clarity, numbers will be hard to compare and easy to manipulate.
Verification should remain proportionate, and while chartered-accountant certification provides a strong safeguard, its costs weigh most heavily on small advisers. . SEBI should provide tiered options wherein larger firms can use full certification, mid-sized firms can rely on accredited third-party verifiers or audited internal reports and the small advisers can face random audits or accept higher liability if they self-certify. These alternatives keep oversight while avoiding a one-size-fits-all burden.
Record-keeping and consent require fundamental digital systems. To track consent renewals, provide client-specific performance, and maintain auditable records, advisers will require secure solutions. SEBI ought to establish minimal technical requirements and permit gradual adherence. In order to prevent smaller firms from falling behind, the regulator can also promote open-source toolkits and low-cost vendors. Supervisory inspections will be sped up and conflicts will be decreased with the explicit guidelines on encryption, retention periods, and access limits.
Digital verification can reduce documentation without compromising oversight. By connecting checks to trustworthy databases like PAN and verified tax records, SEBI can implement a verify-once paradigm. This lessens the need for duplicate checks, but it also necessitates privacy protections, backup plans in case of system failures, and a clear understanding of who is responsible for automated checks that go wrong. Efficiency and safety would be balanced by a hybrid architecture that automates regular inspections and saves manual review for outliers.
The chartered-accountant requirement raises timing and cost questions such as who bears the charge and when must certification occur? SEBI could allow phased certification, for example a short self-certification period followed by formal attestation within a defined window, or it could permit accredited data providers to give standard attestations. Both options would maintain verification while easing the burden on small firms.
Surveillance and enforcement must match a lighter prescriptive approach. A disclosure-led model needs better detection tools such as sample audits, anomaly detection and proportionate penalties that deter misuse. SEBI should build risk-scoring systems that flag outliers and support those systems with periodic manual checks. Targeted enforcement will keep the regime credible without reverting to blanket paperwork requirements.
Finally, continuing competence matters. NISM exams can remain the baseline, but advisers should complete modest annual training and face occasional competency checks. Regular education and random assessments will keep standards current and reduce the risk of persistent low-quality advice.
These measures, precise templates, tiered verification, technical standards and focused supervision, will decide whether SEBI’s easing of procedure strengthens the market or simply removes safeguards that matter.
3. Analysis and practical recommendations
The reforms steer the regulatory model from strict upfront verification toward managed disclosure and supervision. That shift offers real benefits wherein verified past performance will help advisers prove their value. Broader eligibility will bring specialists into the market. Allowing feeable second opinions can encourage holistic advice instead of artificial fragmentation. Reduced paperwork and a longer corporatization window will ease the burden on small firms and solo advisers.
The risks are real since the certification costs favour larger firms. Vague consent rules can reduce protections to routine checkboxes. Technology gaps may leave smaller advisers unable to comply. SEBI and industry stakeholders should focus on templates and proportional verification to manage these risks.
In particular, SEBI must to release required past-performance disclosure templates with precise computation guidelines. For smaller advisers, the regulator ought to tolerate phased attestation and alternate certification pathways. Only permit annual consent for continuing services, and only require transaction-level authorization when a second opinion results in a particular suggestion. Establish minimal technical requirements for safe record-keeping and sharing. Encourage training initiatives and low-cost vendor solutions through trade associations. Rather than verifying every claim in advance, SEBI should rely on sample audits and random checks.
Practically, SEBI should foster an accessible compliance ecosystem by creating a short approved vendor list, offering basic open-source toolkits for consent tracking and record retention, and providing targeted implementation grants to help the smallest advisers reduce the technology gap. Industry associations can run training sessions and provide sample filings. Banks and custodians can offer plug-and-play data feeds that advisers use to generate auditable performance reports. These steps lower the cost of good practice and speed adoption.
Finally, SEBI should phase implementation so advisers can upgrade systems and get attestations because timing is important. Set phased compliance deadlines after publishing vendor guidelines, checklists, and example templates ahead of time. Permit a brief period for self-certification before requiring official attestation. This phased strategy provides small businesses with a feasible route to compliance while minimizing inconvenience. This combination of staging, standardization, and assistance will enable reforms to produce beneficial outcomes for advisors and investors in general.
4.Conclusion
SEBI’s August 2025 consultation paper primarily tries to modernise the IA and RA frameworks while keeping investor protection intact. These proposals can broaden participation, improve client servicing and reduce unnecessary paperwork. The success of the Paper will depend on careful implementation. Clear templates, tiered verification, minimum technical standards and targeted supervision will determine whether the reforms enable advisers and protect investors.