SEBI Circular Update: Interim Framework for Certified Past Performance Data of Investment Advisers and Research Analysts

Introduction

The circular from the Securities and Exchange Board of India (SEBI) dated October 30, 2025 (HO/38/12/11(1)2025-MIRSD-POD/I/73/2025) has been distributed to all Registered Investment Advisers (IAs), Registered Research Analysts (RAs), and their associated administrative and supervisory bodies, IAASB and RAASB.

The circular marks a pivotal transitional arrangement for IAs and RAs to divulge their certified past performance data before the complete operationalisation of the Past Risk and Return Verification Agency (PaRRVA). The implementation has been done as part of SEBI’s larger “Ease of Doing Business” initiative, which aims at promoting transparency, ensuring investor protection, and supporting the industry-wide standardisation in representation of investment performance.

Before this circular, IAs and RAs were prohibited from showing past performance data publicly unless there was an independent verification mechanism in place. However, SEBI has come up with a temporary but structured approach to meet this need due to persistent requests from the industry and associations to allow the sharing of historical data for client transparency.

Explanation: Link to Circular

The official circular can be accessed through SEBI’s website: Ease of Doing Business – Interim Arrangement for Certified Past Performance.

This circular builds upon SEBI’s earlier circular dated April 4, 2025, which laid down the framework for the creation and operationalisation of PaRRVA, an independent body established to verify and validate performance metrics of Investment Advisers and Research Analysts. While PaRRVA will handle the verification of performance data prospectively (i.e., for the period after an entity’s onboarding with the agency), SEBI’s latest circular allows certified performance data for periods before PaRRVA’s operationalisation to be shared under specific, controlled conditions.

Explanation

Background and Industry Context

The Indian investment advisory and research sector has experienced phenomenal growth in the past few years. With this growth came the need for performance data transparency and comparability to a greater extent. Investors are more frequently demanding to see certified evidence of an adviser’s or analyst’s previous performance before making their investment choices. Nevertheless, the absence of a standardised verification system has often led to differences in methodology, hence creating inconsistencies and the risk of misinformation. SEBI, acknowledging these issues, took the initiative to set up PaRRVA, a specialised entity that will independently confirm risk and return metrics for the whole industry.

Although PaRRVA’s systems are still being finalised, the interim circular assures that IAs and RAs will not be put in an operational deadlock. They are now able to give their clients authenticated historical performance data, of course, with certain conditions and compliance standards in place.

Key Provisions of the Circular

The circular lays down the following guidelines for IAs and RAs wishing to share past performance data:

a) Certification Requirement:

Investment Advisers and Research Analysts are authorised to use past performance data certified by a member of the Institute of Chartered Accountants of India (ICAI) or the Institute of Cost Accountants of India (ICMAI). By this means, the data’s reliability and accountability are guaranteed in the validation process.

b) One-to-One Communication Only:

This data can be disclosed to clients or potential clients only on their express request, and it must be handled privately. The use of websites, advertising, or any other media to make the data public is absolutely forbidden.

c) Mandatory PaRRVA Enrolment:

Any IA or RA that intends to disclose certified past performance data must register with PaRRVA within three months of its being operational. After that period, those who have not registered will not be allowed to disclose performance data that has been certified.

d) Applicability Period:

The arrangement for sharing data under these circumstances is limited to the time before the PaRRVA’s commencement of operation. For any performance, consequently, only PaRRVA-certified risk and return metrics can be shared or publicised.

e) Standard Disclaimer Requirement:

To make such communications valid, a standard disclaimer must be included, which indicates that the performance data has not been confirmed by PaRRVA and that it might not be on par with other advisers or analysts. One more thing, the disclaimer will also warn that past performance is not a reliable indicator of future results and that the investments carry market risks.

f) Transition Period:

At the end of the second year after the activation of PaRRVA, IAs and RAs will be prohibited from using non-certified or pre-PaRRVA performance data. Only data verified by PaRRVA will be accepted for communicating to clients or showing them.

g) Enforcement and Compliance:

No matter how these provisions are breached, summary proceedings will be taken under Regulation 30A(1)(c) of the SEBI (Intermediaries) Regulations, 2008, and all such violations will incur financial penalties. This includes penalties for making performance claims that are not authorised by SEBI or have not been verified through the prescribed process.

Role of IAASB and RAASB

In order to normalise communication formats, SEBI has asked IAASB and RAASB to determine the formats in which past performance data certified must be delivered. These templates should be created in collaboration with the industry forums and the SEBI and be submitted within one month of the issuance of the circular.

Conclusion

With this circular, SEBI, in a way, signifies that it is taking another step, which is progressive and is aimed at making the financial services sector more transparent, protecting investors, and increasing operational efficiency. Through the setting up of PaRRVA and an interim framework such as this, SEBI is trying to achieve the balancing act of two major concerns, one of which is allowing the advisers and analysts to gain credibility through verified disclosure, while the other is preventing the use of unverified or misleading performance claims.

Such a change would lead to performance disclosures being more reliable and consistent for the investors, thus, in a way, allowing them to make more informed decisions. In contrast, it would be creating a regulated but facilitating environment for the professionals where ethical standards will be observed, but at the same time, less procedural uncertainty will be there. While the industry is waiting for the full-scale implementation of PaRRVA, this interim arrangement is serving as a crucial bridge, along with trust, accountability, and standardisation in India’s investment advisory and research ecosystem, which is evolving.