Qualifications & Examinations to Clear before One can become a RIA
Accreditation of Certifications for Investment Advisors
Functions of NISM
National Institute of Securities Markets (NISM) performs two functions delegated to it under the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007. These are:
- Offering mandatory certification examinations for securities market intermediaries
- Offering Continuing Professional Education (CPE) programs for market intermediaries who are holding certificates.
- A professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the central government or any state government or a recognised foreign university or institution or association; or
- A graduate in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
- from NISM; or
- from any other organization or institution including Financial Planning Standards Board India or any recognized stock exchange in India provided that such certification is accredited by NISM.:
- On the basis of the likely expenditure associated with the process of accreditation, the applicant organization has to submit a non-refundable application fee of Rs. 1,00,000 per application.
- Subsequently, on grant of accreditation, the applicant organization should pay Accreditation Fees of Rs. 1,00,000/- per certification accreditation, within 7 calendar days of communication ofaccreditation application status.
- Accreditation shall be granted for an initial period of 1 year and thereafter it may be further renewed for a period of 2 years subject to fulfillment of NISM requirements. Renewal Fees for accreditation shall be Rs. 2,00,000/- per accreditation.
- For maintaining the database of certified professionals on NISM’s Skills Registry, a fee of Rs. 500/- per candidate per certificate shall be charged by NISM. This is subject to periodic revision by NISM. The certifying institution shall provide this fee in bulk along with the data of the certified candidates as required by NISM.
SEBI (Investment Advisers) Regulations, 2013
SEBI has notified the SEBI (Investment Advisers) Regulations, 2013 on January 21, 2013. As per the Regulation, an individual registered as investment advisor shall have a certification from NISM or any other organization or institution provided that such certification is accredited by NISM. The following is the extract of the SEBI (Investment Advisers) Regulations, 2013 pertaining to Qualification and Certification Requirement:
Qualification and Certification Requirement
1. An individual registered as an investment adviser under these regulations and partners and representatives of an investment adviser registered under these regulations offering investment advice shall have the following minimum qualifications, at all times:
2. An individual registered as an investment adviser and partners and representatives of investment advisers registered under these regulations offering investment advice shall have, at all times, a certification on financial planning or fund or asset or portfolio management or investment advisory services:
Provided that the existing investment advisers seeking registration under these regulations shall ensure that their partners and representatives obtain such certification within two years from the date of commencement of these regulations:
Provided further that fresh certification must be obtained before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirements.
Accreditation of Certifications
NISM shall accredit certification examinations as per established criteria and standards.
NISM will accredit specific certification examination(s) for which application is submitted. It should be noted that NISM will not accredit the applicant’s organization.
Examination Objectives, Training content and courseware etc for each applied certification examination will be evaluated against examination content criteria as may be specified by NISM from time to time. Generally, the content of the certification examinations must at least cover all the topics which have been covered in NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination and NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination.
Accreditation shall be granted for a maximum period of one year initially.
Thereafter, Accreditation may be further renewed for a period of 2 years, subject to fulfillment of NISM requirements.
NISM will monitor the quality of accredited certification examinations and will have the discretion to terminate the accreditation, if required. Termination may be attributed to poor quality of content, lack of periodic updates or repeated complaints from candidates or any other reasons, as may be decided by NISM from time to time.
Further, the number of accredited certification examinations may also depend on demand for such certifications from the market participants, with a focus on NISM’s objective of creating a uniform standard minimum knowledge benchmark across the industry.
In order to evaluate the application for accreditation of the particular certification examination for which application has been submitted, the certification examination should have been available to the candidates for a period of at least 3 years.
Application for accreditation of certification examination should score at least 80% marks in each of the section to be eligible for accreditation.
Steps in the accreditation process:
Step 1: Interested organizations submit the application form along with non-refundable application fee for a specific certification examination with all supporting documents;
Step 2: NISM evaluates the application and may seek additional information if needed;
Step 3: NISM evaluation presented to the Accreditation Committee;
Step 4: Accreditation Committee may meet and interact with representatives of shortlisted applicants , if required;
Step 5: Accreditation Committee makes recommendations to NISM after scrutiny based on which NISM takes the final decision.
Step 6: NISM communicates the decision to the applicant;
Step 7: In case ‘conditional’ accreditation is granted, NISM may suggest changes to the course curriculum, administrative capacity, etc, where required prior to accreditation. The applicant must incorporate the required changes, inform and obtain approval from NISM prior to accreditation.
Maintenance of Database for Certified Individuals
Upon completion of the process of accreditation of a certification examination, NISM shall seek details of candidates who have passed the accredited certification examination from the certifying institution. Such details may be provided on a continuing basis at a periodicity that shall be decided by NISM in NISM prescribed formats. The information will include details of the candidates and validity of the certificates.
The details of the candidates who have been certified by the virtue of their holding the accredited certificate may also be made available on NISM Skills Registry.
NISM’s Skills Registry database maintains the details of all the certified candidates and makes it available to the general public for checking the veracity of the certificates held by the candidates.
To ensure the quality of accredited certification examinations, NISM may conduct inspections from time to time and may also audit the processes and procedures followed to conduct accredited certification examinations.
Source: National Institute of Securities Markets