The stock market regulator will soon start regulating investment advisors. “We are working on regulations for investment advisors,” said market regulator Securities and Exchange Board of India (Sebi) chairman M. Damodaran on Wednesday.
The final regulation, however, is still some time away as the regulator will be undertaking a detailed consultative process to arrive at the laws that will govern investment advisors—a segment of capital market which has never been regulated at all.
“There is a mindblowing variety of investment advisors currently offering advice using various media. This presents a complex challenge for us. We will soon publish on our website what we seek to achieve by the regulation. We will invite inputs and debate from the public, based on this. After this, the Sebi advisory committee will decide what to regulate and how to regulate,” Damodaran said.
Many types of investment advisors are in operation currently. They range from a one-man operations to wealth managers from big brokerages, banks, insurance agents and mutual fund distributors. Wealth management is a fast- growing income stream for many brokerages.
The Sebi chairman also said work on guidelines for real-estate mutual funds is at an advanced stage.
He expects the first real-estate mutual funds to be launched in a few months. “There are two issues that are being addressed at present. We have made significant progress on the first one relating to valuation of unlisted assets. The second issue about the accounting standards to be applied for real-estate mutual funds is being looked at by the Institute of Chartered Accounts of India,” he said.
The stock market regulator is working with Association of Mutual Funds of India, the premier body of the Rs 3.5 lakh crore mutual fund industry, and the institute to frame the guidelines for real-estate mutual funds.