SEBI invites public comments on draft paper to review Investor Charter for RTAs, RAs – CNBC TV18

Markets regulator SEBI on Friday invited public comments on a draft paper to review the investor charter for RTAs, investment advisers, and research analysts, aimed at enhancing financial consumer protection and literacy.

The investor charter should provide details about the activities of registrars to an issue and share transfer agents (RTAs), research analysts (RAs), and investment advisers (IAs), SEBI said in three separate draft circulars.

Additionally, these investor charters should outline the Dos and Don’ts for investors engaging with RTAs, RAs, and IAs.

The move comes in the wake of advancements in grievance redressal mechanisms, such as the introduction of SCORES 2.0 and the Online Dispute Resolution (ODR) platform, aimed at providing faster and more efficient investor services.

The investor charter for RTAs outlines services such as KYC updates, transmission of shares, dividend processing, and corporate actions like ESOPs and bonus issues, with expected timelines ranging from 15 to 30 days.

To ensure transparency, all registered RTAs will continue to disclose, on their respective websites, data on complaints received against them or the issues handled by them, and redressal thereof, by the 7th of every month.

RAs must maintain high standards of disclosure and offer unbiased recommendations, including disclosure of financial interests in the recommended securities. The charter mandates that RAs inform clients about material conflicts of interest and the extent of AI tool usage in research services.

The proposal also requires that clients be given clear guidance and caution when receiving recommendations involving complex and high-risk financial products or services.

Similarly, for IAs, the charter emphasises a transparent client onboarding process and unbiased risk profiling. IAs are expected to fully disclose their business models, affiliations, and compensation structures in client agreements, and not discriminate in service quality among clients opting for the same or similar offerings.

The charter also empowers investors with rights to exit services, seek fair grievance redressal, and be informed about AI integration in advisory processes.

Further, SEBI has directed all registered RTAs to disseminate the investor charter via websites, emails, and ensure it is prominently displayed at their offices.

SEBI has invited public comments on the proposals until 2 May.