Guidelines to Become SEBI Approved Stock Market Advisor No person can act as Investment Advisor unless he has obtained a certification from SEBI. However, SEBI has exempted insurance agents, pension advisors and advocates from this registration. Securities and Exchange Board of India, SEBI, regulates the finance that investment markets in India. Established in 12th April, 1992, SEBI is mainly responsible to the needs of the issuers of the securities, the investors, the market intermediaries. The functions of SEBI include: i) Drafting regulations, as a part of its legislative power. ii) Investigation and enforcement of action, according to executive action. iii) Passing orders and setting rules, as per its judicial capacity. This judicial power enables SEBI to set instructions for Investment Advisors. Stocks and investments are sensitive issues, and investors require advices which only competent investment advisors can provide. Thus, SEBI has brought ‘The SEBI Investment Advisor’s Regulation’ in 2013, which specify conditions for, * Registration * Capital adequacy * Risk profiling and suitability * Disclosures to made * Code of conduct * Records to be maintained * Manner of conducting inspection No person can act as Investment Advisor unless he has obtained a certification from SEBI. However, SEBI has exempted insurance agents, pension advisors and advocates from this registration. A SEBI approved stock market advisor should have the following criteria: A) A professional qualification, or a degree or diploma of post-graduation is required from a state or centrally recognized institution or university. In case of foreign universities and institutions, it must also be recognized by the government. Their qualification must be from one of the following fields: * Finance * Accountancy * Business management * Commerce
* Economics * Capital market * Banking * Insurance * Actuarial science On failing to match this minimum criterion, a person must become a graduate in any of the above fields and gather 5 years of experience from financial product advising. B) They must acquire a certification from National Institute of Securities Market (NISM), or certifications from institutions, provided that they are recognized by NISM). All investment advisors should have had procured their certification within 2 years from the day the regulation was commenced. They must also renew the certification before expiry. Only then shall they be registered under the Investment Advisor’s regulations of SEBI. C) A trust must be maintained by the investment advisor with his client at all times and he should not withhold any information regarding a conflict of interest, if at all it arises. An advisor shall receive payment only by the client he advices. He will not receive any type of remuneration from any other sources. D) There must be a strictly professional relationship between him and his client and should not mix other activities with his role of advising. SEBI has provided Know Your Client(KYC) procedures which an advisor must follow at all times. E) Corporate bodies which act as investment advisors should have asset worth at least Rs. 25 lakhs, while the minimum worth is Rs. 1 lakh in case of individuals or partnership firms. The validity of the registration certificate given under these regulations is 5 years, after which it must be renewed to continue as an investment advisor. Conclusion- SEBI has brought forward these regulations to put a check on the Investment Advisors. They must be thoroughly educated to advice on matter such as this which requires knowledge over market trends. Moving Averages is one of the best trend following tool, and it can only be deciphered by competent advisors. Thus, this strict yet necessary regulations will enable clients to be at peace with their investments, as they will get the correct advises.