Reply To SEBI On Consultation Paper Self Regulatory Organizations in Securities Market

Reply to SEBI on 21-Apr-2019

Name of the Entity/ Person: Atul Gandhi CommunicateAtul@Gmail.com 9371331337
Sl. No.	Reference Para of the Consultation Paper or other provisions of the SRO Regulations	Suggestions	Rationale
	1.1.1 5.5.1 5.5.4	Option A) Most preferred option Single SRO for all people / entities doing business in securities market Research analyst Investment Advisor AMC Mutual fund PMS IA / RA Broker Television Print media competitions/games Open / electronic media like facebook / twitter / youtube etc Legendary wealth creator people like Rakesh Junjunwala speaking in public Option B) Second preferred option Have separate SRO for a) IA doing financial planning b) IA doing mutual fund advisory c) IA doing stock market advisory	Rational of Option A 1) Level playing field: Regulation / business environment / law / legal environment should be same / treat all people / entities /intermediaries doing business in securities market 2) Some months ago Research analyst regulation restriction made mandatory for Investment Advisor. If Research analyst regulation restriction made mandatory for Investment Advisor , then logically it should have been made applicable to other intermediately doing business in stock market like broker or portfolio manager appearing in public media discussing stock with or without consideration 3) Portfolio manager can invest in a stock / sector and then come on public media like CNBC tv & talk positive about stock / sector they invested. But IA is put under RA regulation restriction. Law should be equal to all 4) Say a portfolio manager invests in a stock and then talk positive in CNBC. Portfolio manager did not get any consideration for talking positive, but it is likely that that stock may go up & Portfolio manager get indirectly benefited. And after few weeks /months, Portfolio manager can exit stock & at the time of existing stock he may not inform on CNBC. 5) It is possible : One arm of institution buys a stock and afterword other arm of same institution recommend same stock to public : One arm of institution recommends a stock to public and other arm of same institution sells stock /books profit. Those who got lot of money power, can create different vertical i.e. subsidiary and offer all kind of financial service (one stop financial shop) Whether department / division or subsidiary, ownership remains same Ultimately management, beneficiary & profit of business goes to owners of business, & SEBI has chosen to overlook this factor 6) Financially rich institutions should not be given preferences / advantages / treated differently / different law over investment ad visors. 7) Broker, who is interested in broking income, can give research report / investment advice. SEBI says its incidental to their business. But restrictions on IA / RA has been put by SEBI 8) Investor can get input from print-tv-online media without risk profiling and KYC. Restrictions on IA and RA are put by SEBI 9) IA regulation put compulsion for doing risk profiling. Regulation clearly mentions that “income details” and “existing investments/ assets” should be taken from client But Investor can open demat & trading account without doing risk profiling Investor can buy or sell stock as per his wish without doing risk profiling Investor can take input new paper or CNBC or other media & buy or sell stock without doing risk profiling 10) Law should be same for all intermediaries as well as print-tv-online media in securities business. Rational of Option B 1) Consultation paper says there are are approx. 1,24,000+ distributors of MF products Vs only 1,136 IAs registered with SEBI as on March IA are less than 1% of total. IA business model is very different from distributor, so we need different SRO. 2) Put in simple words Differnt SRO for 1) intermediaries doing financial planning 2) intermediaries doing mutual fund business 3) intermediaries doing only stock market advisory 3) In past I am registered myself as Investment advisor, offering investment advisory service in stock market. I advice for direct buying / selling in stock market MF is distributor does not advice direct investment in stock market. At AMC there is fund manager who decides buying / selling in stock market Business structure / nature are different. So need is there for separate SRO