Sebi notifies regulations to boost regulatory framework

The Securities and Exchange Board of India (SEBI) has notified the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2025. It is aimed at strengthening the regulatory framework for investment advisers in India. The amendments, effective immediately, also mark a significant step toward enhancing investor protection and ensuring financial accountability within the advisory sector.

The 2025 amendments focus on revising the deposit requirements under Regulation 8 of the SEBI of India (Investment Advisers) Regulations, 2013. Key changes include the substitution of sub-regulation (2), which now mandates that the deposit maintained by investment advisers must adhere to the form or manner specified by SEBI. Additionally, a new sub-regulation (3) has been introduced, requiring the deposit to be marked as a lien in favour of a recognized body or body corporate responsible for the administration and supervision of investment advisers, as outlined in Regulation 14.

The lien-marked deposit serves as a financial safeguard, ensuring that funds are available to settle dues arising from arbitration and conciliation proceedings under SEBI’s online dispute resolution mechanism or other specified mechanisms. This move is expected to bolster investor confidence by providing a recourse mechanism in case of disputes, particularly for smaller investors who rely on investment advisers for financial guidance.

The introduction of the lien-marked deposit requirement is likely to have a significant impact on investment advisers, particularly smaller firms with limited resources.

Investment advisers are now required to ensure compliance with the updated deposit requirements, with SEBI expected to provide further guidelines on the form and manner of the deposit. The regulator will also periodically review these requirements to ensure they remain effective in protecting investors and maintaining market stability.