Description

SEBI notifies the second amendment to Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, introducing changes to terminology and qualification requirements for investment advisers and their personnel.

Summary

SEBI has issued the Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2025, published in the Official Gazette on November 25, 2025. This amendment modifies the SEBI (Investment Advisers) Regulations, 2013 by simplifying terminology throughout the regulations and updating qualification requirements for investment advisory personnel.

Key Points

  • Regulation name simplified from “SEBI [Winiyan (Investment) Advisers]” to “SEBI (Investment Advisers)”
  • Terminology standardized: “Winiyan” (client) terminology replaced with “Niveshak” (investor) throughout
  • References to “sub-brokers” removed from Regulation 4, Clause (chh)
  • Qualification requirements updated for principal officers and investment advisory personnel
  • CFA Institute’s CFA Charter now explicitly recognized as qualifying credential
  • NIFM (National Institute of Financial Markets) programs added as qualifying certifications
  • Post Graduate Programs in Securities Market (Investment Advisory) and Financial Planning from NIFM now accepted
  • Amendment applies to individual investment advisers and non-individual investment advisers’ principal officers and partners

Regulatory Changes

Terminology Changes:

  • “Winiyan/Winiyankarta” replaced with “Nivesh/Niveshak” (Investment/Investor)
  • Title simplified from bracketed format to standard parenthetical notation
  • Consistent use of “investor” instead of mixed “client/investor” terminology

Regulation 4 Amendment:

  • Removed all references to “sub-brokers” from eligibility and conflict of interest provisions

Regulation 7 - Qualification Requirements:

Updated Clause (a):

  • Graduate degree from Central/State Government recognized university or institution
  • Graduate degree from recognized foreign university, institution or association
  • CFA Charter from CFA Institute explicitly included
  • Relevant certificate from NISM or NISM-recognized organization required

Updated Clause (g):

  • Post Graduate Program in Securities Market (Investment Advisory) from NISM
  • Post Graduate Program in Financial Planning from NISM
  • Other NISM programs as specified by SEBI

Scope Expanded:

  • Qualifications now apply to “principal officers or persons associated with investment advice”
  • For partnership firms: requirements extend to partners

Compliance Requirements

Immediate Actions for Investment Advisers:

  1. Review and update internal documentation to reflect new terminology
  2. Ensure all personnel providing investment advice meet updated qualification standards
  3. Verify that principal officers and advisory personnel hold certificates from NISM or NISM-recognized organizations
  4. Update compliance manuals and procedures to align with amended regulations
  5. Remove any references to sub-broker affiliations in disclosures

Personnel Requirements:

  • All investment advisory personnel must possess minimum educational qualifications under revised Clause (a) or (g)
  • Existing personnel may need to obtain additional NISM certifications if not already compliant
  • Partnership firms must ensure all partners meet qualification standards

Documentation Updates:

  • Client agreements and disclosures must use “investor” terminology consistently
  • Marketing materials and website content should be updated to reflect new terminology
  • Registration certificates and filings may require amendments

Important Dates

  • Notification Date: November 25, 2025
  • Publication in Gazette: November 25, 2025 (CG-MH-E-25112025-267962)
  • Effective Date: November 25, 2025 (effective from date of publication in Official Gazette)
  • Compliance Timeline: Immediate effect; investment advisers should update practices and documentation promptly

Impact Assessment

Industry Impact: This amendment significantly affects all SEBI-registered investment advisers by standardizing terminology and raising the bar for personnel qualifications. The removal of sub-broker references clarifies the distinction between advisory and distribution activities, reducing potential conflicts of interest.

Operational Impact:

  • Investment advisers must audit their personnel qualifications against new standards
  • Firms may need to sponsor employees for NISM certification programs
  • Documentation overhaul required across client-facing and internal materials
  • Partnership firms face additional compliance burden ensuring all partners meet criteria

Market Impact:

  • Enhanced professionalization of investment advisory industry
  • Improved investor protection through higher qualification standards
  • Clear separation between advisory and intermediary functions
  • International recognition through inclusion of CFA Charter may attract globally qualified professionals

Compliance Cost:

  • Moderate to high for firms with non-compliant personnel requiring certification
  • Administrative costs for documentation updates
  • Potential recruitment challenges if existing staff lack required qualifications

Positive Developments:

  • Recognition of CFA Charter aligns India with global standards
  • NIFM programs provide domestic pathway for qualification
  • Simplified terminology reduces confusion in investor communications
  • Stronger investor confidence through enhanced professional standards

Impact Justification

Mandatory regulatory amendment affecting all registered investment advisers, requiring compliance with revised terminology and qualification standards for personnel