SEBI Introduces New Framework for Performance Verification Agency

SEBI has unveiled the operational framework for the Past Risk and Return Verification Agency (PaRRVA) to ensure the accuracy of performance claims made by financial intermediaries. The pilot project aims to enhance transparency by verifying the risk and return metrics of financial products and services.

The Securities and Exchange Board of India (SEBI) unveiled its operational framework for the Past Risk and Return Verification Agency (PaRRVA) on Friday, aimed at curbing misleading performance claims in financial advertisements. The initiative provides a structured pathway for performance validation by outlining responsibilities and setting eligibility standards for credit rating agencies (CRAs).

To launch this framework, SEBI has proposed a two-month pilot phase during which feedback from stakeholders will be solicited to fine-tune the process. The agency will scrutinize the risk and return metrics of financial products and services offered by intermediaries, including investment advisers and stock brokers.

Eligibility criteria for CRAs to act as verification agencies are stringent, requiring at least 15 years of industry experience, a net worth of Rs 100 crore, and an effective investor grievance redressal mechanism. SEBI will oversee compliance and transparency through an oversight committee, inspections, and stern guidelines.

(With inputs from agencies.)