In a move aimed at enhancing transparency and accountability in fee transactions within the securities market, the Securities and Exchange Board of India (SEBI) on September 13, 2024, has unveiled a new optional mechanism for fee collection by registered Investment Advisers (IAs) and Research Analysts (RAs). This initiative is designed to create a more streamlined and transparent payment ecosystem for investors.
Introduction of the Centralized Fee Collection Mechanism
With the increasing participation of investors in the securities market, ensuring that fees are paid only to registered professionals is becoming crucial. To address this need, SEBI has introduced the “Centralized Fee Collection Mechanism for IAs and RAs” (CeFCoM). This mechanism aims to simplify and secure the process of fee payments from clients to registered IAs and RAs.
Operational Details
The CeFCoM will be managed through a dedicated platform or portal administered by a recognized Administration and Supervisory Body (ASB). The platform, developed in collaboration with BSE Limited and various stakeholders, will facilitate the collection of fees. BSE Limited is responsible for specifying the operational framework for this mechanism, which will be in place by September 23, 2024. The mechanism is set to become operational on October 1, 2024.
Although participation in this mechanism is optional, the ASB will actively encourage both clients and registered IAs and RAs to utilize it. Registered professionals are also encouraged to promote the use of this new system among their clients.
This circular is issued under the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, in conjunction with regulation 14 and regulation 15A of the SEBI (Investment Advisers) Regulations, 2013, and SEBI (Research Analysts) Regulations, 2014. The introduction of the CeFCoM aims to protect investors' interests and promote the development and regulation of the securities market.
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