The Securities and Exchange Board of India (Sebi) has published a framework for the Past Risk and Return Retention Office (PARRVA), designed to independently verify the risk and return statistics that are claimed by investment advisers (IAS), research analysts (RAS) and Algorithmic.
Parrva was introduced on December 19 during the SEBI council meeting to offer investors independent verification of the risk and return characteristics of these services before they invest.
Sebi informed on 4 April that creditworthiness agencies (CRAs) that meet strict criteria of strict criteria can be recognized as parrvas; While recognized fairs based on Parrva SATA centers (PDCs) occur, which offer the necessary infrastructure.
Parrva will ultimately be responsible for the verification process, although they can use the PDC services.
The SEBI criteria stated that cras that a parrva status applies to at least 15 years and must have a assets of at least £100 crore, and bourses that work as PDCs, must also exist for at least 15 years and a capacity of £200 Crore. They are obliged to have a robust recovery mechanism for investors, including online dispute settlement (ODR).
Sebi clarified that supervision will supervise a two -stage recognition process with approval of the principle followed by definitive recognition. After the latest recognition, Parrvas will carry out a two -month pilot program to refine systems and processes. During this period, Sebi will collect feedback from regulated persons and verified data will not be made public during the pilot.
Supervision panel for Parrva
The circular also stated that Parrvas will set up a supervisory committee to follow activities. Any representation of risk return statistics verified by Parrva and any claim that such statistics use is accompanied by suitable disclaimers, clarified the circular.
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“These will include disclaimers that indicate that performance from the past is not indicative of future results, verified returns do not guarantee insured returns, the information about risk-retard statistics should not be used as a singular decisions, and the verified return of the actual return.
For dispute settlement, the circular indicated that all disagreements between Parrvas and the regulated entities would be treated by a mechanism established by the Parrva itself. This system, set up within two months of the approval of Sebi’s in principle, will also be able to appeal to the Parrva supervisory committee.
If the supervisory committee cannot solve the issue, both the Parrva and the regulated entity can pursue a solution via the Portal Online Dispute Resolution (ODR), which guarantees an impartial and efficient process.
For investors, complaints with regard to PARRVA-rejected risk and return statistics or complaints will be tackled directly against PARRVA via the score platform. In cases that require further dispute resolution, the ODR portal is used.
