The Securities and Exchange Board of India (SEBI) has recently released a consultation paper proposing a significant change in record-keeping requirements for regulated entities like portfolio management services (PMS), alternative investment funds (AIFs), and registered investment advisors (RIAs). Under the proposed rule, these entities would be mandated to maintain records of all mandatory communication for a minimum period of eight years.

Currently, there is no such mandatory requirement in place.

The regulator believes this move will significantly enhance its ability to resolve investor grievances, protect investor interests, and identify instances of legal breaches. By having access to a comprehensive record of communications, SEBI can ensure better compliance, increase transparency, and boost investor confidence in the securities market.

The proposal also mandates that regulated entities make these records and their acknowledgements available to SEBI upon request. It is worth noting that SEBI has clarified that the proposal is limited to mandatory communication only.

Stakeholders have been invited to share their feedback on this consultation paper by September 13. This move by SEBI underscores its commitment to strengthening investor protection and promoting a fair and transparent securities market.

If implemented, the new rule could usher in a new era of accountability and transparency in the Indian financial landscape.

To read the consultation paper, click here