SEBI to allow IAs, RAs fulfill deposit requirement via liquid fund units

As per SEBI regulations, investment advisors and research analysts are required to maintain a deposit of a sum as specified by SEBI from time to time by June-end
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FRANCIS MASCARENHAS

Capital market regulator SEBI plans to allow investment advisors and research analysts to fulfill their mandatory monetary deposit through liquid funds.

As per SEBI regulations, investment advisors (IA) and research analysts (RA) are required to maintain a deposit of a sum as specified by SEBI from time to time by June-end.

Market participants and investors can share their comments on the proposal by May 29.

In a consultation paper, SEBI has proposed to allow IAs and RAs to provide units of liquid mutual fund marked as lien in favour of their Administration and Supervisory body. Lien on such units of mutual fund shall be marked for at least one year. These units of liquid mutual can be in the form of Statement of Account (SOA) or in the demat at an option of IA/RA, said SEBI.

The mutual funds units are valued based on the Net Asset Value of the mutual fund unit. It is proposed that the eligible amount of deposit for lien marking shall be the value of units of liquid mutual fund reduced by such haircut as may be decided by ASB and applicable exit load, it proposed.

The value of the mutual fund units for calculating the eligible amount of deposit can be reviewed every year as per the guidelines for deposit requirement. In case of any decrease of value of mutual fund below the threshold deposit requirement or the deposit requirement increases due to increase in the number of clients, IAs/RAs have to replenish the deposit amount within a specified period of such a review by marking the lien on the additional units of the liquid mutual funds proportionate to the additional deposit requirement in favour of ASB, it said.

Published on May 9, 2025