The market watchdog has come up with a new set of rules for Research analysts (RAs) and Investment Advisors (IAs). The Sebi rules for RAs, and IAs allow them to communicate with the existing clients about MITC – Most Important Terms and Conditions via email or any other mode which can be stored or preserved.
The circular, issued yesterday, 17 February 2025, mentions the standard format for communicating about MITC for the Ras and the IAs. By 30 June 2025, the existing clients need to be informed about the MITCs as directed by the circular by SEBI.
The MITC updates need to be integrated into the service agreements, with disclosure of full terms and consent mandatory in the form of physical signatures, or digital signatures. All the parties – clients, Ras, and IAs, need to adhere to these rules.
How will it affect the market dynamics?
SEBI has been considering this for quite some time now as RAs, and IAs were facing concerns in their business due to complicated methods of communication and compliance norms. With this new rule of communication, there can be faster and smoother communication between the clients the RAs, and the IAs, making the entire process crisp and smooth and also helping to secure the communication for future references.
What MITC is important for?
In the MITC, the maximum annual fees of RAs, and IAs for each family have been mentioned and it also specifies the collection period for the permitted advance fee, which is three months for the research analysts, and six months for the investment advisors. However, the industry participants want this tenure to be at least a year and thus SEBI has floated a consultation paper on the same.
Wrapping up
Now it will be interesting to see how the RAs and IAs use this new way of communication in their favour and grow their businesses. For the investors, it will be easy to access the document, and sign it with the e-sign option and can also store it for life.
Source: CNBC TV18
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