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Listed depository, Central Depository Services (India) Ltd (CDSL) on Thursday announced that its wholly-owned subsidiary CDSL Ventures Ltd (CVL) has received approval from the Securities and Exchange Board of India (Sebi) to set up an accreditation agency for accreditation of eligible Investors.

The recognition of CVL as an accreditation agency will be valid for a period of three years with effect from 1 February 2022.

Sebi in August 2021 had introduced a concept of ‘accredited investor’ in the Indian securities market.

Under the framework covering Alternative Investment Funds (AIFs), Portfolio Managers Services (PMSes) and investment advisors, accredited investors may avail of flexibility in minimum investment amount (lower ticket size) or concessions from specific regulatory requirements applicable to investment products, subject to conditions applicable for specific products or services. Persons desirous of being reckoned as accredited investors can approach an accreditation agency such as CVL for accreditation.

Commenting on the approval, Nehal Vora, managing director and chief executive officer, CDSL, said, “It is a very happy and proud milestone for us as our wholly-owned subsidiary, CVL, which received the accredited investor approval. We believe in providing ease of business to all market participants and that this approval will be a catalyst in further achieving our vision to build a financial eco-system that is convenient, secured and dependable for the investors."

As per a separate notification by Sebi, the procedure for accreditation of an investor and verification of accreditation status of an investor by investment providers (viz Alternative Investment Funds, Portfolio Managers and, Investment Advisers) and other modalities along with relevant circulars have to be displayed on the website of CDSL and CVL.

The concept of a class of investors who have an understanding of various financial products and the risks and returns associated with them, and therefore, can make informed decisions regarding their investments, is recognized by many securities and financial market regulators around the globe. These investors are typically termed accredited investors, qualified investors or professional investors.

The new flexible regulatory framework is expected to result in customized investment products, reduced compliance, better risk labelling (product classification) and increased transparency.

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