SEBI Urges Brokerage Firms to Register on New Return Verification Platform

Sebi Pushes for Greater Participation in New Return Verification Platform

The Securities and Exchange Board of India is urging brokerage firms to engage more actively with its newly launched return verification platform, PaRRVA, aimed at enhancing transparency in the financial advisory sector.

Understanding PaRRVA’s Role

The PaRRVA initiative, approved last year, is designed to independently verify the historical risk and return metrics of various market intermediaries, including research analysts, investment advisers, and algorithmic trading providers. The verification agency, Care Ratings, oversees the process, while the National Stock Exchange (NSE) serves as the data center. This verification allows intermediaries to present their performance metrics to clients, thereby fostering trust and accountability in the financial advisory landscape.

Current Participation Levels

As of now, only four Qualified Stock Brokers (QSBs) have registered on the platform, which include prominent names such as Groww, HDFC Securities, Angel One, and SMC Global. Overall, around 360 intermediaries have joined, comprising over 250 research analysts and approximately 110 investment advisers. This participation is notably low compared to the total registered figures of around 2,270 research analysts and 1,048 investment advisers in India, as reported by Sebi.

Barriers to Adoption

Despite the potential benefits of the PaRRVA platform, industry insiders cite high costs as a significant barrier to wider adoption. The annual fees for QSBs can be steep, with a fixed fee of around ₹1 crore or a usage-based pricing model that charges ₹12.5 lakh per recommendation category. For trading members, the annual fee is approximately ₹40 lakh or ₹5 lakh per recommendation. These costs have led to hesitancy among many firms in the industry, as they weigh the benefits against the financial burden.

Regulatory Implications and Future Outlook

Sebi has established a framework that mandates investment advisers and research analysts to register on PaRRVA and route their investment calls through the platform during a 90-day cooling-off period. After this period, only verified performance metrics can be communicated to clients. This regulatory push aims to standardize performance reporting in the industry, ensuring that clients receive reliable and verified information. Failure to comply with these regulations will result in restrictions on communicating past performance data.

Key Highlights

• Approximately 360 intermediaries have registered on PaRRVA, including over 250 research analysts and 110 investment advisers.
• PaRRVA independently verifies historical risk and return metrics for market intermediaries.
• High annual charges are cited as a key barrier to broader adoption among brokerages.
• Only four QSBs—Groww, HDFC Securities, Angel One, and SMC Global—are currently onboarded.
• Investment advisers and analysts may be required to display only PaRRVA-verified performance metrics in the future.

Investor Note: The ongoing push by Sebi for greater participation in the PaRRVA platform highlights the regulator’s commitment to enhancing transparency in the financial advisory sector. Investors should monitor how these developments may affect the quality of advice and performance reporting in the market.