In April 2023, SEBI issued an advertisement code for SEBI registered Investment Advisers (RIAs) and Research Analysts (RAs). The advertisement code prohibited the RIAs and RAs to display the past performance or provide reference to past performance or risk-return metrics in respect of the services unless such risk-return metrics are verified by a verification agency.
Since then, the RIA and RAs have operated under regulatory constraints that discouraged or prohibited to display their past performance. This was largely because there was no standardised, trustworthy mechanism to verify risk-return claims.
Recognising this gap, SEBI had earlier proposed the creation of Past Risk and Return Verification Agency (PaRRVA), a Performance Validation Agency (PVA).
PaRRVA is envisioned as an independent body (or bodies) that will validate risk- and return-metrics of RIAs, RAs and Algo Providers making performance claims “verifiable” rather than just self-reported.
While it will facilitate registered intermediaries to disclose their performance to the investors,
SEBI will have checks and balances to protect the interest of investors against unverified claims/ performance.
Since PaRRVA is not yet fully operational, SEBI’s October 30, 2025 circular provides an interim arrangement allowing RIAs / RAs to share certified past performance under strict conditions.
I happened to speak with Mr. Amit Kumar (name changed), an individual investment adviser, who is into this industry for more than 10 years.
Excitedly he said, “Kruti, first SEBI relaxed the entry barriers to get the RIA and RA license. And then permitted the RIAs and RAs to display their past performance. SEBI is really working towards “ease of doing business” for Investment Advisers (RIAs) and Research Analysts (RAs). So, can I now freely display my past performance on my website?”
Yes, you read that right! RIAs and RAs can now share their past performance with clients and prospective clients! But you cannot offer it proactively. With such relaxations one should expect restrictions too!
“What kind of restrictions you are talking about? Please share more details.” There was a concern in his voice.
Yes sure, Amit.
There are two main conditions you have to take care of:
- You can share your past performance only on specific request from a client or prospective client. Your performance cannot be shared as a general public advertisement on your website, social media, broadcast messages or any other marketing posts and documents.
- the past performance should be certified by a member of Institute of Chartered Accountants of India (ICAI) or Institute of Cost Accountants of India (ICMAI) or equivalent.
“Oh, I see! So, I cannot freely share the performance of my portfolio. And I understand the certification bit. But wasn’t a performance validation agency going to be established by SEBI?”
Yes, SEBI is in the process of establishing Past Risk and Return Verification Agency (PaRRVA). So, consider this as an interim arrangement by SEBI.
You can share performance only for the period before PaRRVA becomes operational.
Once PaRRVA becomes operational, RIAs/RAs will have three months to enrol with it. Otherwise, one will not be able to communicate certified past performance data to clients.
After two years from the date of operationalisation of PaRRVA, RIAs and RAs will be permitted to communicate or display only PaRRVA verified risk and return metrics.
“Got it, Kruti! But how will the consistency still be maintained? Are there any criteria established by SEBI on how the performance can be calculated?”
Yes Amit, BSE Ltd. i.e. IAASB / RAASB has issued details of performance matric. You can select one or more performance metrics.
I shared with him the details mentioned below.
*Along with the time period, you can choose to provide any other additional information too.
But, bear in mind that you have to adopt a single, consistent performance calculation methodology at all times for each category of advice or recommendation. This is to enhance transparency and ensure uniformity.
“Understood. And knowing SEBI all this while, I am sure we need to add some disclosures and disclaimers while sharing the performance. Can you throw some light on that as well?”
Oh yes, you have guessed it right.
Whenever you share past performance (on request), it should include:
- the name/nature of service/advice/recommendation to whom the performance relates to.
- the performance metrics used and parameters adopted
- the applicable time period for the performance
- the information/details to help the user understand about how the performance has been calculated
- the assumptions made during performance calculation
- a clear disclaimer that the data is “not PaRRVA-verified” and that “past performance does not guarantee future results.” The detailed disclaimer as specified by SEBI is mentioned in the circular.
- certification provided by the member of ICAI/ICMAI
“Oh! That is lots to display. What happens if any RIA or RAs does not follow the restrictions and display or make claims of the past returns without certification?”
That’s simple to answer. If any person or entity is found to have made claim(s) of return or performance in respect of or related to a security or securities, such intermediary will be liable for enforcement actions, including summary proceedings.
“Okay, thank you for all the information, Kruti. I think, we need to wait and watch, how other industry is reacting to this interim arrangement by SEBI till PaRRVA becomes operational.”
Yes! SEBI’s move is undeniably a significant boost for RIAs and RAs. For the first time, the industry can officially showcase performance backed by independent certification.
However, this is still an interim arrangement until PaRRVA becomes fully operational. The current CA/CMA certification model does not establish a fully standardised validation mechanism.
Therefore, RIAs and RAs must treat this phase as a preparatory runway. They should:
- Build robust performance recording systems
- Adopt consistent methodologies aligned with SEBI’s framework
- Prepare for smooth transition to PaRRVA verification
Once PaRRVA is launched, every IA and RA will have just three months to enrol. Those who are ready early will enjoy a seamless shift into a more structured, trusted, and reputationally rewarding disclosure environment.
In essence, while this temporary arrangement brings opportunity, it also signals the future of compliance. RIAs and RAs who adopt discipline now will lead in the credibility-first regime SEBI is putting in motion.
“I agree with you. Thank you for guiding me, as always, Kruti. I will stay in touch with you!
If you have any further questions, you can write to me at kruti@cskruti.com.