Investment Adviser Administration and Supervisory Body
Also written IAASB
A body recognised by SEBI under Regulation 14 of the IA Regulations to administer and supervise investment advisers; no one may act as an investment adviser without enlisting with it. The first was BASL.
In plain language
SEBI registers thousands of investment advisers. Many of them are single individuals. Watching each one directly is heavy work for a regulator. It means collecting reports, checking certificates, and chasing fees and net worth.
So SEBI set up a body to do that day-to-day work. It is called the Investment Adviser Administration and Supervisory Body (IAASB).
SEBI still registers and regulates advisers. The IAASB does the rest:
- it enlists advisers as members, which means it signs them up;
- it collects their regular reports;
- it applies its own bye-laws, which are its own set of rules.
One point is key. An adviser who is not enlisted with the IAASB cannot act as an adviser.
How it works
The legal basis (Chapter 19). Under Regulation 14 of the SEBI (Investment Advisers) Regulations, 2013, SEBI may recognise a body or body corporate for the administration and supervision of investment advisers, to the extent and on the terms SEBI specifies.
The enlistment rule. SEBI has specified that no person shall act as an investment adviser unless enlisted with the recognised body. Once enlisted, both the IA Regulations and the specified provisions of that body's bye-laws or articles apply to the adviser.
The first IAASB. BSE Administration & Supervision Ltd (BASL), a wholly-owned subsidiary of BSE Limited. Accordingly, all existing SEBI-registered investment advisers, and new applicants for registration, are mandatorily required to register with BASL as members.
What membership involves. BASL or SEBI prescribes conditions for continuing as a member, which may include:
- maintenance of minimum net worth;
- a deposit;
- renewal of certification, if any;
- payment of annual fees, other fees and charges.
Members carry out periodic reporting and submit documents BASL calls for. Admission of a member who fails to meet these requirements is liable to be terminated — and since enlistment is a precondition, termination stops the adviser from acting as one.
Context in the same chapter. An investment adviser acts in a fiduciary capacity and must disclose conflicts; an individual adviser must apply for non-individual registration on or before reaching 150 clients; records are kept for 5 years; the annual audit must be completed within 6 months of the financial year end.
A worked example
Illustrative facts. Meenakshi Iyer is a SEBI-registered individual investment adviser in Chennai with 138 clients.
| Event | Consequence |
|---|---|
| She is registered with SEBI | Not enough on its own — she must also be enlisted with BASL to act as an adviser |
| BASL calls for her periodic report | She must submit it; reporting is a membership condition |
| Her NISM certification lapses and she does not renew it | Renewal of certification is a condition of continued membership; her admission is liable to be terminated |
| She reaches 150 clients without applying for non-individual registration | Breach of the IA guidelines; she may not onboard fresh clients from the 150th until registration as a non-individual adviser is granted |
Rupee view of termination. Suppose her advisory fee averages Rs 40,000 per client per year.
Annual fee income at 138 clients = 138 × Rs 40,000 = Rs 55,20,000
If BASL terminates her membership, she cannot act as an investment adviser at all — all of that income stops, not merely the fees from new clients. The cost of the lapsed certificate is not a penalty; it is the practice.
Why NISM asks about it
Chapter 19 (SEBI (Investment Advisers) Regulations, 2013), 2% of the paper, introduces the IAASB framework and names BASL.
Expect a direct question — "the first IAASB recognised by SEBI is ___" (BSE Administration & Supervision Ltd, a wholly-owned subsidiary of BSE) — and a True/False on whether an adviser registered with SEBI can act without being enlisted (it cannot).
Common exam traps
- SEBI recognises the IAASB; the IAASB does not replace SEBI. Registration with SEBI and enlistment with the IAASB are both required.
- No enlistment, no advising — "no person shall act as an investment adviser unless enlisted".
- BASL is a wholly-owned subsidiary of BSE Limited, not of SEBI or NISM.
- Existing advisers as well as new applicants must register with BASL.
- Two rulebooks apply: the IA Regulations and the specified provisions of the body's bye-laws or articles.
- Termination of membership follows failure to meet conditions such as net worth, deposit, certification renewal or fees.
Where this is taught
Free preparation for NISM Series III-ARelated terms
- Asset under adviceThe aggregate net value of securities on which an investment adviser has given advice, whether or not the adviser, the client or another provider implements it — the base for AUA-mode advisory fees.
- Investment adviceAdvice on buying, selling or dealing in securities or investment products, including financial planning. Only a SEBI-registered Investment Adviser may give it for a fee; mass-media commentary is excluded.
- Persons associated with investment adviceAny member, partner, officer, director, employee or sales staff of an investment adviser who is engaged in providing investment advisory services to the adviser's clients.
- Stock exchange bye-lawsThe rules each stock exchange frames for its own trading members — admission, listing, fees, trading and settlement, members' rights, arbitration — approved by SEBI and consistent with the SCRA, SCRR and SEBI Act.
- SuitabilityThe investment adviser's obligation under Regulation 17 to ensure that every piece of advice fits the client's documented risk profile, investment objectives and capacity to absorb loss.