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Master Circular for Investment Advisers - SEBI - SEBI/HO/MIRSD-PoD-2/P/CIR/2023/89Extract ..... nded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of this Master Circular; c) The previous operation of the rescinded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the rescinded circulars, any penalty, incurred in respect of any violation committed against the rescinded circulars, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the rescinded circulars have never been rescinded. 5. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 6. This circular is available on SEBI website at www.sebi.gov.in . Yours faithfully Srishti Ambokar Deputy General Manager Tel. No. 022-26449354 srishtijc@sebi.gov.in I. GUIDELINES FOR INVESTMENT ADVISERS 1. Guidelines for Investment Advisers 1 1.1. SEBI, after ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... ucts only. (i) The IAs shall maintain on record an annual certificate from an auditor (in case of individual IA) and its statutory auditor (in case of a non-individual IA) confirming compliance with the client level segregation requirements as specified in Regulation 22 of the IA Regulations. Such annual certificate shall be obtained within 6 months of the end of the financial year and form part of compliance audit, in terms of Regulation 19(3) of the IA Regulations. (ii) Agreement between IA and the client (a) Regulation 19(1)(d) of the IA Regulations provides that IA shall enter into an investment advisory agreement with its clients. The said agreement shall mandatorily cover the terms and conditions provided in Annexure A. (b) IA can include additional terms and conditions in the agreement without diluting the provisions of the IA Regulations and amendments thereto as well as circulars issued thereunder. (c) IA shall ensure that neither any investment advice is rendered nor any fee is charged until the client has signed the aforesaid agreement and provided copy of signed agreement to the client. (iii) Fees Regulation 15A of the IA Regulations provides that IAs shall be entitled ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... es. (v) Registration as Non Individual Investment Advisor a. As per Regulation 13(e) of the IA Regulations, an individual IA shall apply for registration as non-individual investment adviser on or before reaching 150 clients. b. Such application for registration shall be made in FORM-A as per the IA Regulations, along with the requisite fee and same shall be assessed in accordance with the provisions of the IA Regulations and amendments thereto as well as circulars issued thereunder. c. Once number of clients reaches 150 and till grant of registration as a non-individual IA, Individual IA shall not on-board fresh clients. However, during the period of examination of application by SEBI, individual IA shall continue to service existing clients. In case the aforesaid IA does not get registration as non-individual IA, such IA shall continue the advisory activities as an Individual IA while ensuring that the numbers of clients does not exceed 150 in total. d. As per Regulation 13(e) of the IA Regulations, existing Individual IA having more than 150 clients as on September 30, 2020 shall not on-board fresh clients and such Individual IA shall apply for registration as non-individual IA ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... with the non-individual client. However, IA shall have discretion not to onboard non-individual clients if they are unable to do risk profiling of the non-individual client in the absence of investment policy. (ix) Display of details on website and in other communication channels In order to protect the interest of investors and bring more transparency in the functioning of the IAs, the IAs shall display the following information prominently on its website, mobile app, printed or electronic materials, know your client forms, client agreements and other correspondences with the clients: Complete name of Investment Adviser as registered with SEBI, Type of Registration-Individual, Non-Individual, Registration number, validity of registration, Complete address with telephone numbers, Contact details of the Principal Officer contact no, email id etc., Corresponding SEBI regional/local office address. 1.3. Applicability Client level segregation of advisory and distribution activities, agreement and fees to be charged are aligned together. II. MEASURES TO STRENGTHEN THE CONDUCT OF INVESTMENT ADVISER S 2. Measures to strengthen the conduct of Investment Advisers 5 2.1 Restriction on free ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... IA Regulations, SEBI can recognize any body/body corporate for the purpose of regulating IAs. It further provides that SEBI may, at the time of recognition of such body or body corporate, delegate administration and supervision of IAs to such body or body corporate on such terms and conditions as may be specified. 3.3 Further, the second proviso to Regulation 38 (2) of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 states, inter alia, that a recognized stock exchange may engage in activities, whether involving deployment of funds or otherwise that are unrelated or not incidental to its activity as a stock exchange, through a separate legal entity and subject to approval of the Board. 3.4 Considering the growing number of registered IAs and the above mentioned provisions, it was decided to recognize a wholly-owned subsidiary of the stock exchange (stock exchange subsidiary) to administer and supervise IAs registered with SEBI. A. Criteria for grant of recognition The recognition of stock exchange subsidiary, in terms of the aforesaid Regulation 14, shall be based on the eligibility of the parent entity, i.e. the stock exchange, f ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... y of BSE Limited, has been granted recognition as IAASB for a period of three years from June 01, 2021. The details may be perused in the Press Release issued by SEBI on June 14, 2021 and available at https://www.sebi.gov.in/media/press-releases/jun-2021/bse-administration- and-supervision-limited-granted-recognition-for-administration-and- supervision-of-investment-advisers_50540.html, which also provides a link for the Standard Operating Procedure (SOP) and the Frequently Asked Questions (FAQs) issued by BASL. 4.3 IAASB shall inter-alia have following responsibilities: i. Supervision of IAs including both on-site and offsite ii. Grievance redressal of clients and IAs iii. Administrative action including issuing warning and referring to SEBI for enforcement action iv. Monitoring activities of IAs by obtaining periodical reports v. Submission of periodical reports to SEBI vi. Maintenance of database of IAs 4.4 The Board of the IAASB shall, at all times, be chaired by a Public Interest Director and shall also have, at all times, a Director who will bring investor perspective. 4.5 SEBI shall continue to concurrently administer and supervise all registered IAs and IAASB shall be subje ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... to the data safety and security. 5.2 In this regard, Indian Computer Emergency Response Team (CERT-in) has issued an advisory for Financial Sector organizations. The advisory has been forwarded to SEBI for bringing the same to the notice of financial sector organization. The advisory can be viewed at Annexure D. 5.3 It is advised to ensure complete protection and seamless control over the critical systems at your organizations by continuous monitoring through direct control and supervision protocol mechanisms while keeping the critical data within the legal boundary of India. vide e-mail dated November 14, 2022 communicated the extended timeline for compliance by IAs to BSE Administration Supervision Limited 5.4 The compliance of the advisory shall be reported half yearly by IAs to SEBI with an undertaking, Compliance of the SEBI circular for Advisory for Financial Sector Organizations regarding Software as a Service (SaaS) based solutions has been made. V. INVESTOR COMPLAINTS 6. Redressal of investor grievances through SEBI Complaints Redress system (SCORES) Platform10 6.1. SEBI has been taking various measures to create awareness among investors about grievance mechanisms availa ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... by 7th of the succeeding month in the revised format as per Annexure C on a monthly basis. IAs not having websites/mobile applications shall send status of Investor Complaints to the investors on their registered email on a monthly basis. 7.4 Further, the IAs are advised to display link/option to lodge complaint with them directly on their websites and mobile apps. Additionally, link to SCORES website/ link to download mobile app (SEBI SCORES) may also be provided. 7.5 The disclosure requirements under this clause came into effect from January 01, 2022. VI. MISCELLANEOUS 8. Procedure for seeking prior approval for change in control 12 8.1. Regulation 15(11) of the IA Regulations, IA shall obtain prior approval of SEBI in case of change in control. 8.2. To streamline the process of providing approval to the proposed change in control of IA (hereinafter referred as IA or applicant), it has been decided as under: i. IA shall make an online application to SEBI for prior approval through the SEBI Intermediary Portal ( SI Portal ) (https://siportal.sebi.gov.in). ii. The online application in SI portal shall be accompanied by the following information/ declaration/ undertaking about itsel ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... streamline the process of providing approval to the proposed change in control of an IA in matters which involve scheme(s) of arrangement which needs sanction of the National Company Law Tribunal ( NCLT ) in terms of the provisions of the Companies Act, 2013, the following has been decided: i. The application seeking approval for the proposed change in control of the IA shall be filed with SEBI prior to filing the application with NCLT. ii. Upon being satisfied with compliance of the applicable regulatory requirements, an in-principle approval will be granted by SEBI; iii. The validity of such in-principle approval shall be three months from the date issuance, within which the relevant application shall be made to NCLT. iv. Within 15 days from the date of order of NCLT, the IA shall submit an online application in terms of clause 8.2 along with the following documents to SEBI for final approval: a. Copy of the NCLT Order approving the scheme; b. Copy of the approved scheme; c. Statement explaining modifications, if any, in the approved scheme vis-vis the draft scheme and the reasons for the same; and d. Details of compliance with the conditions/ observations, if any, mentioned in t ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... p, social media etc. and the details such as full name, logo/brand name, full registered office address, SEBI registration number, membership number of a SEBI recognized supervisory body and standard disclaimer are not mentioned, then official website hyperlink should be provided in such SMS/Message/Pop-up, etc. and the website must contain all such details. vii. In case any specific security/ securities are displayed in the advertisement as examples, disclaimer that The securities quoted are for illustration only and are not recommendatory should be mentioned. viii. Advertisements and communications/correspondences with clients shall include the disclaimer that Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the IA or provide any assurance of returns to investors. c. Prohibitions in the advertisement: The advertisement shall not contain: i. Anything which is prohibited for publication under the law. ii. Statements which are false, misleading, biased or deceptive, based on assumptions or projections. iii. Any misleading or deceptive testimonials. iv. Statements which, directly or by implication or by omission, may misl ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... ned and issuing advertisement wherein the IA has been named in the advertisement. v. Copy of the advertisement shall be retained by IA for a period of five years in terms of Regulation 19(2) of the IA Regulations. vi. Any additional guidelines as may be specified by SEBI or SEBI recognized supervisory body from time to time. 9.2. In order to ensure the transparency in usage of brand name/trade name/logo, IA/RA shall ensure that: i. The information such as name of the IA as registered with SEBI, its logo, its registration number and its complete address with telephone numbers shall be prominently displayed on portal/web site, if any, notice board, display boards, advertisements, publications, know your client forms and client agreements. ii. The information such as name of the IA as registered with SEBI, its logo, its registration number, its complete address with telephone numbers, the name of the compliance officer, his telephone number and e- mail address, the name, telephone number and e-mail address of the grievance officer or the grievance redressal cell shall be displayed prominently in statements or reports or any other form of correspondence with the client. iii. Disclaimer ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... due diligence and ensure proper care in their operations. 12.2. It has been observed that often the intermediaries resort to outsourcing with a view to reduce costs, and at times, for strategic reasons. 12.3. Outsourcing may be defined as the use of one or more than one third party either within or outside the group - by a registered intermediary to perform the activities associated with services which the intermediary offers. 12.4. Principles for Outsourcing The risks associated with outsourcing may be operational risk, reputational risk, legal risk, country risk, strategic risk, exit-strategy risk, counter party risk, concentration and systemic risk. The principles for outsourcing are given in Annexure F. 12.5. Activities that shall not be Outsourced: The intermediaries desirous of outsourcing their activities shall not, however, outsource their core business activities and compliance functions. An example of core business activity may be execution of orders and monitoring of trading activities of clients in case of stock brokers. Regarding Know Your Client (KYC) requirements, the intermediaries shall comply with the provisions of SEBI {KYC (Know Your Client) Registration Agency ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... of their activities, and ensure to communicate such policies, procedures and code to all concerned; b. at all times maintain high standards of integrity in the conduct of their business; c. ensure fair treatment of their clients and not discriminate amongst them; d. ensure that their personal interest does not, at any time conflict with their duty to their clients and client s interest always takes primacy in their advice, investment decisions and transactions; e. make appropriate disclosure to the clients of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services; f. endeavor to reduce opportunities for conflict through prescriptive measures such as through information barriers to block or hinder the flow of information from one department/ unit to another, etc.; g. place appropriate restrictions on transactions in securities while handling a mandate of issuer or client in respect of such security so as to avoid any conflict; h. not deal in securities while in possession of material non published information; i. not to communicate the material non published information while dealing in securities ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... d by US taxpayers in other countries. As per the aforesaid agreement, foreign financial institutions (FFIs) in India will be required to report tax information about US account holders / taxpayers directly to the Indian Government which will, in turn, relay that information to the U.S. Internal Revenue Service (IRS). 16.3. For implementation of the MCAA and agreement with USA, the Government of India has made necessary legislative changes to Section 285BA of the Income Tax Act, 1961. Further, the Government of India has notified Rules 114F to 114H (herein after referred to as the Rules ) under the Income Tax Rules, 1962 and form No. 61B for furnishing of statement of reportable account specified in the Rules. The Rule is available at http://www.incometaxindia.gov.in/communications/notification/notification% 20no.%2062%20dated%2007-08-2015.pdf 16.4. A Guidance Note on implementation of Reporting Requirements under Rules 114F to 114H of the Income Tax Rules as issued by the Department of Revenue, Ministry of Finance vide F.No.500/137/2011-FTTR-III dated August 31, 2015 is available at http://www.incometaxindia.gov.in/communications/notification/guidance_not es_on_im plementation_31_0 ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... * Inclusive of complaints of previous months resolved in the current month. # Inclusive of complaints pending as on the last day of the month ^ Average Resolution time is the sum total of time taken to resolve each complaint in days, in the current month divided by total number of complaints resolved in the current month Trend of monthly disposal of complaints Sr. No. Month Carried forward from previous month Received Resolved* Pending# 1 April, YYYY 2 May, YYYY 3 June, YYYY ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... ars issued thereunder from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India within six months from the end of each financial year. Submit a report of the same and adverse findings of the audit, if any, along with action taken thereof duly approved by the individual IA/management of the non-individual IA within a period of one month from the date of the audit report but not later than October 31st of each year for the previous financial year. VIII. ANNEXURES ANNEXURE A TERMS AND CONDITIONS OF AGREEMENT BETWEEN IA AND THE CLIENT Investment Adviser shall ensure that the following terms and conditions are incorporated in the Investment Advisory Agreement: 1. Appointment of the Investment Adviser : In accordance with the applicable laws, client hereby appoints, entirely at his / her / its risk, the Investment Adviser to provide the required services in accordance with the terms and conditions of the agreement as mandated under Regulation19(1)(d) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. 2. The agreement shall clearly provide for in the first page: a) ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... as specified under the Investment Adviser Regulations at all times. c) Risk assessment procedure of client including their risk capacity and risk aversion. d) Providing reports to clients on potential and current investments. e) Maintenance of records i.e. client-wise KYC, risk assessment, analysis reports of investment advice and suitability, terms and conditions document, related books of accounts and a register containing list of clients along with dated investment advice and its rationale in compliance with the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. f) Provisions regarding audit as per the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. g) Undertaking to abide by the Code of Conduct as specified in the Third Schedule of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. 5. Investment objective and guidelines: a) Types of securities in which investment advice would be provided, including an undertaking from the investment adviser to recommend direct implementation of advice i.e. through direct schemes/direct codes, and other client specifications ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... e tenure of advisory service; ii. In case of Investment Adviser who are individuals: (a) to represent that they shall not provide any distribution services. (b) to represent that the family of an individual Investment Adviser shall not provide distribution services to the client advised by the individual Investment Adviser, for securities and investment products. (c) to represent that they shall not provide investment advisory services, for securities and investment products, to a client who is receiving distribution services from other family members; iii. The Investment Adviser (non-individual); (a) to represent that they shall not provide any distribution services, for securities and investment products, either directly or through their group to an advisory client. (b) to represent that they shall not provide investment advisory services, for securities and investment products, either directly or through their group to the distribution client. 13. Representation to client: The investment adviser to ensure that it will take all consents and permissions from the client prior to undertaking any actions in relation to the securities or investment prod ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... t: Provisions in relation to continuation / termination of the advisory service in event of client's death / disability, succession, nomination, representation etc. to be incorporated. 21. Death or Disability of investment adviser: Every individual investment adviser must appoint one of its legal heirs, executor, trustee, administrator of estate of the deceased (the Obligor ) as the person-in-charge in the event of investment adviser s death / disability. The agreement must set out the full name, PAN and contact details of such Obligor. The agreement must disclose the steps to be taken by the Obligor in the event of the above eventuality in order to ensure protection of interest of the clients and redressal of clients claims, including but not limited to (a) giving notice to all clients of the occurrence of the eventuality and confirmation of having taken charge over by the Obligor (b) settlement of account with the client (fees payable and/or fees refundable), (c) completion of transition of any outstanding business to another duly registered investment adviser, (d) redressal of any outstanding or new disputes / claims of clients. 22. Settlement of disputes and provisi ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... mbers and associated SEBI regional/local Office details in its website. To employ only qualified and certified employees. To deal with clients only from official number To maintain records of interactions, with all clients including prospective clients (prior to onboarding), where any conversation related to advice has taken place. C. Details of services provided to investors (No Indicative Timelines) Onboarding of Clients o Sharing of agreement copy o Completing KYC of clients Disclosure to Clients o To provide full disclosure about its business, affiliations, compensation in the agreement. o To not access client s accounts or holdings for offering advice. o To disclose the risk profile to the client. To provide investment advice to the client based on the risk-profiling of the clients and suitability of the client. D. Details of grievance redressal mechanism and how to access it 1. In case of any grievance / complaint, an investor should approach the concerned Investment Adviser and shall ensure that the grievance is resolved within 30 days. 2. If the investor s complaint is not redressed satisfactorily, one may lodge a ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... rns by the Investment Advisers. Don t let greed overcome rational investment decisions. iv. Don t fall prey to luring advertisements or market rumors. v. Avoid doing transactions only on the basis of phone calls or messages from any Investment adviser or its representatives. vi. Don t take decisions just because of repeated messages and calls by Investment Advisers. vii. Do not fall prey to limited period discount or other incentive, gifts, etc. offered by Investment advisers. viii. Don t rush into making investments that do not match your risk taking appetite and investment goals. ix. Do not share login credential and password of your trading and demat accounts with the Investment Adviser. ANNEXURE C COMPLAINT DATA TO BE DISPLAYED BY IAs Formats for investors complaints data to be disclosed monthly by IAs on their website/mobile application: Data for the month ending -_____________ Sr. No. Received from Pending at the end of last month Received Resolved Total Pending # Pendin ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... * Inclusive of complaints of previous months resolved in the current month. # Inclusive of complaints pending as on the last day of the month Trend of annual disposal of complaints Sr. No. Month Carried forward from previous year Received Resolved Pending# 1 2018-19 2 2019-20 3 2020-21 4 20XX-XX Grand Total * Inclusive of ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... ricted to participants' organizations. When should be used: Sources may use TLP: AMBER when information requires support to be effectively acted upon, yet carries risks to privacy, reputation, or operations if shared outside of the organizations involved. How may it be shared: Recipients may only share TLP:AMBER information with members of their own organization, and with clients or customers who need to know the information to protect themselves or prevent further harm. Sources are at liberty to specify additional intended limits of the sharing: these must be adhered to.) ANNEXURE E DECLARATION CUM UNDERTAKING FOR SEEKING PRIOR APPROVAL FOR CHANGE IN CONTROL We M/s. ( Name of the intermediary/the acquirer/person who shall have the control ), hereby declare and undertake the following with respect to the application for prior approval for change in control of (name of the intermediary along with the SEBI registration no.): 1. The applicant/intermediary (Name) and its principal officer, the directors or managing partners, the compliance officer and the key management persons and the promoters or persons holding controlling interest or person ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... is granted. 8. We hereby undertake that pursuant to grant of prior approval by SEBI, the incumbent shall inform all the existing investors/ clients about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management. The said information is true to our knowledge. (stamped and signed by the Authorised Signatories) ANNEXURE F PRINCIPLES FOR OUTSOURCING FOR INTERMEDIARIES 1. An intermediary seeking to outsource activities shall have in place a comprehensive policy to guide the assessment of whether and how those activities can be appropriately outsourced. The Board / partners (as the case may be) {hereinafter referred to as the the Board } of the intermediary shall have the responsibility for the outsourcing policy and related overall responsibility for activities undertaken under that policy. 1.1. The policy shall cover activities or the nature of activities that can be outsourced, the authorities who can approve outsourcing of such activities, and the selection of third party to whom it can be outsourced. For example, an activity shall not ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... cal to those followed while outsourcing to an unrelated party. 2.3. The records relating to all activities outsourced shall be preserved centrally so that the same is readily accessible for review by the Board of the intermediary and / or its senior management, as and when needed. Such records shall be regularly updated and may also form part of the corporate governance review by the management of the intermediary. 2.4. Regular reviews by internal or external auditors of the outsourcing policies, risk management system and requirements of the regulator shall be mandated by the Board wherever felt necessary. The intermediary shall review the financial and operational capabilities of the third party in order to assess its ability to continue to meet its outsourcing obligations. 3. The intermediary shall ensure that outsourcing arrangements neither diminish its ability to fulfill its obligations to customers and regulators, nor impede effective supervision by the regulators. 3.1. The intermediary shall be fully liable and accountable for the activities that are being outsourced to the same extent as if the service were provided in-house. 3.2. Outsourcing arrangemen ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... en the intermediary and each of the third parties, the nature and detail of which shall be appropriate to the materiality of the outsourced activity in relation to the ongoing business of the intermediary. 5.2. Care shall be taken to ensure that the outsourcing contract: 5.2.1. clearly defines what activities are going to be outsourced, including appropriate service and performance levels; 5.2.2. provides for mutual rights, obligations and responsibilities of the intermediary and the third party, including indemnity by the parties; 5.2.3. provides for the liability of the third party to the intermediary for unsatisfactory performance/other breach of the contract 5.2.4. provides for the continuous monitoring and assessment by the intermediary of the third party so that any necessary corrective measures can be taken up immediately, i.e., the contract shall enable the intermediary to retain an appropriate level of control over the outsourcing and the right to intervene with appropriate measures to meet legal and regulatory obligations; 5.2.5. includes, where necessary, conditions of sub-contracting by the third- party, i.e. the contract shall enable intermediar ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... e third party. 6.3. To ensure business continuity, robust information technology security is a necessity. A breakdown in the IT capacity may impair the ability of the intermediary to fulfill its obligations to other market participants/clients/regulators and could undermine the privacy interests of its customers, harm the intermediary s reputation, and may ultimately impact on its overall operational risk profile. Intermediaries shall, therefore, seek to ensure that third party maintains appropriate IT security and robust disaster recovery capabilities. 6.4. Periodic tests of the critical security procedures and systems and review of the backup facilities shall be undertaken by the intermediary to confirm the adequacy of the third party s systems. 7. The intermediary shall take appropriate steps to require that third parties protect confidential information of both the intermediary and its customers from intentional or inadvertent disclosure to unauthorised persons. 7.1. An intermediary that engages in outsourcing is expected to take appropriate steps to protect its proprietary and confidential customer information and ensure that it is not misused or misappropriate ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... ng Standards (CRS)-Guidance Note 8 SEBI/HO/MRD/DSA/CIR/P /2016/113 19-Oct-16 Facilitating transaction in Mutual Fund schemes through the Stock Exchange Infrastructure 9 SEBI/HO/IMD/DF1/CIR/P/ 2019/169 27-Dec-19 Measures to strengthen the conduct of Investment Advisers (IA) 10 SEBI/HO/IMD/DF1/CIR/P/ 2020/04 09-Jan-20 Operating Guidelines for Investment Advisers in International Financial Services Centre 11 SEBI/HO/IMD/DF1/CIR/P/ 2020/31 28-Feb-20 Operating Guidelines for Investment Advisers in International Financial Services Centre (IFSC) Clarifications 12 SEBI/HO/IMD/DF1/CIR/P/ 2020/148 06-Aug-20 Administration and Supervision of Investment Advisers 13 SEBI/HO/IMD/DF1/CIR/P/ 2020/182 23-Sep-20 Guidelines for Investment Advisers 14 SEBI/HO/IMD/DF1/CIR/P/ 2020/185 28-Sep-20 Operating Guidelines for Investment Ad ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x ..... pectively of the IA Regulations 4 Reference: Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/694 dated December 21, 2021 5 Reference: Circular No. SEBI/HO/IMD/DF1/CIR/P/2019/169 dated December 27, 2019 6 Reference: Circular No. SEBI/HO/IMD/IMD-II CIS/P/CIR/2021/0686 dated December 13, 2021 7 Reference: Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/148 dated August 06, 2020 8 Reference: Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 dated June 18, 2021 9 Reference: Circular No. SEBI/HO/MIRSD2/DOR/CIR/P/2020/221 dated November 03, 2020. SEBI 10 Reference: Circular No.CIR/MIRSD/3/2014 dated August 28, 2014 and SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated November 07, 2022 11 Reference: Circular No. SEBI/HO/IMD/IMD-II CIS/P/CIR/2021/0686 dated December 13, 2021 12 Reference: Circular No. SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2022/163 dated November 28, 2022 13 Reference: Circular Nos. SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2023/51 dated April 05, 2023 and SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2023/52 dated April 06, 2023 14 Reference: Circular No. SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016 15 Reference: Circular No. CIR/ISD/1/2011 dated March 23, 2011 16 Circular CIR/ISD/2/2011 dated March 24, 2011 ..... x x x x x Extracts x x x x x Master Circular for Investment Advisers - SEBI x x x x x Extracts x x x x x
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