MANU/SIPM/0021/2020

Ministry : Securities and Exchange Board of India

Department/Board : Investment Management Department

Circular No. : SEBI/HO/IMD/DF1/CIR/P/2020/148

Date : 06.08.2020

Notification/ Circulars Referred : Circular SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016 MANU/SMFD/0005/2016

Citing Reference:
Circular SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016 MANU/SMFD/0005/2016  Referred

All Recognised Stock Exchanges

Sir / Madam

Administration and Supervision of Investment Advisers

1. SEBI, vide Circular SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016, allowed registered Investment Advisers (IAs) to use infrastructure of the stock exchanges to purchase and redeem MF units directly from Asset Management Companies on behalf of their clients.

2. As per Regulation 14 of the SEBI (Investment Advisers) Regulations 2013 (hereinafter referred to as "IA Regulations"), SEBI can recognize any body/body corporate for the purpose of regulating IAs. It further provides that SEBI may, at the time of recognition of such body or body corporate, delegate administration and supervision of IAs to such body or body corporate on such terms and conditions as may be specified.

3. Further, the second proviso to Regulation 38 (2) of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 states, inter alia, that a recognized stock exchange may engage in activities, whether involving deployment of funds or otherwise that are unrelated or not incidental to its activity as a stock exchange, through a separate legal entity and subject to approval of the Board.

4. Considering the growing number of registered investment advisers and the above mentioned provisions, it is decided to recognize a wholly-owned subsidiary of the stock exchange (stock exchange subsidiary) to administer and supervise IAs registered with SEBI.

A. Criteria for grant of recognition- The recognition of stock exchange subsidiary, in terms of the aforesaid Regulation 14, shall be based on the eligibility of the parent entity, i.e. the stock exch........