The Securities and Exchange Board of India (Sebi) has introduced a Performance Validation Agency (PVA) to independently verify claims made by registered intermediaries, including research analysts and investment advisors. The move aims to boost transparency and credibility for investors. The proposed PVA will validate various claims related to investment advice, ‘buy/sell/hold’ recommendations, mutual fund schemes, and portfolio management services offered by Sebi-registered intermediaries. It will operate as a wholly-owned subsidiary of market infrastructure institutions (MIIs) or a jointly supported entity by multiple MIIs. The PVA will assess parameters such as returns, risk, and volatility, maintaining confidentiality throughout the process.
Facts/Terms for UPSC Prelims
- SEBI (Securities and Exchange Board of India): Sebi is the regulatory authority overseeing the securities market in India. It plays a crucial role in regulating and promoting fair and transparent practices in the Indian financial markets.
- Performance Validation Agency (PVA): The PVA is an independent entity proposed by Sebi to verify the performance claims made by registered intermediaries, ensuring transparency and protecting investor interests.
- Market Infrastructure Institutions (MIIs): MIIs are entities responsible for maintaining the infrastructure of financial markets. They include stock exchanges, depositories, clearing corporations, and others, playing a vital role in market operations.
- Credit Rating Agencies: Credit rating agencies assess the creditworthiness of entities, including corporations and governments, by assigning credit ratings. They provide crucial information to investors about the risk associated with investing in a particular entity’s debt securities.
