Regulation 22 - Client level segregation of advisory and distribution activities. - Securities and Exchange Board of India (Investment Advisers) Regulations 2013

1 [ Client level segregation of advisory and distribution activities. 22 (1) An individual investment adviser shall not provide distribution services. (2) The family of an individual investment adviser shall not provide distribution services to the client advised by the individual investment adviser and no individual investment adviser shall provide advice to a client who is receiving distribution services from other family members. (3) A non-individual investment adviser shall have client level segregation at group level for investment advisory and distribution services. Explanation. - (i) The same client cannot be offered both advisory and distribution services within the group of the non-individual entity. (ii) A client can either be an advisory client where no distributor consideration is received at the group level or distribution services client where no advisory fee is collected from the client at the group level. (iii) Group for this purpose shall mean an entity which is a holding, subsidiary, associate, subsidiary of a holding company to which it is also a subsidiary or an investing company or the venturer of the company as per the provisions of Companies Act, 2013 for non-individual investment adviser which is a company under the said Act and in any other case, an entity which has a controlling interest or is subject to the controlling interest of a non-individual investment adviser. (4) Non-individual investment adviser shall maintain an arm s length relationship between its activities as investment adviser and distributor by providing advisory services through a separately identifiable department or division. (5) Compliance and monitoring process for client segregation at group or family level shall be in accordance with the guidelines specified by the Board. ] ************* NOTES:- 1. Substituted vide Notification No. SEBI/LAD-NRO/GN/2020/22 dated 03-07-2020 before it was read as, Segregation of execution services. 22. Investment advisers which are banks, NBFCs and body corporate providing distribution or execution services to their clients shall keep their investment advisory services segregated from such activities: Provided that such distribution or execution services can only be offered subject to the following: (a) The client shall not be under any obligation to avail the distribution or execution services offered by the investment adviser. (b) The investment adviser shall maintain arms length relationship between its activities as investment adviser and distribution or execution services. (c) All fees and charges paid to distribution or execution service providers by the client shall be paid directly to the service providers and not through the investment adviser.