The Securities and Exchange Board of India (Sebi) is set to introduce a Performance Validation Agency (PVA) to verify claims of market outperformance made by various investment intermediaries, Chairperson Madhabi Puri Buch announced on August 2. Speaking at a FICCI capital market conference in Mumbai, she praised the National Stock Exchange (NSE) for its pioneering work in utilizing technology to make such validation affordable and credible.
The PVA aims to authenticate the performance claims of algorithm providers, research analysts, investment advisors, and portfolio managers. This move is expected to enhance transparency and trust in the financial market by allowing these entities to validate their claims using advanced and cost-effective technology.
The move is part of Sebi’s broader endeavour to ease the process of registration and operations of intermediaries in the investment ecosystem. “We are trying to fasten the process of intermediary registration. We should ensure that people who want to come into this ecosystem are facilitated as soon as possible,” Buch said. She said that Sebi was committed to making the entire life cycle of intermediaries more efficient by setting up working groups focused on ‘ease of doing business’.
The PVA will cover performance claims in investment advice, ‘Buy/Sell/Hold’ recommendations, mutual fund schemes, portfolio management services, and algorithms. This has been done in response to several representations from the investment advisory industry for a viable mechanism to validate their performance claims. With the PVA coming into play, perhaps Sebi wishes to add more credibility to the intermediaries involved in the investment processes and better, surer information to investors for making apt decisions.
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Source: Moneycontrol
News Desk
