SEBI launched PaRRVA, a first-of-its-kind agency to verify past returns of market intermediaries. Partnering with NSE and CAREEdge, it aims to curb misleading claims, enhance market transparency, and help investors make informed decisions.
SEBI Launches PaRRVA for Market Transparency
Investors in India will now have access to independently verified past returns of market intermediaries, with SEBI unveiling Past Risk and Return Verification Agency (PaRRVA) a first-of-its-kind global initiative aimed at bringing credibility and transparency to financial markets.
Launched in partnership with the National Stock Exchange of India and CAREEdge Ratings, PaRRVA introduces a standardized framework to validate historical performance claims made by Investment Advisors (IAs), Research Analysts (RAs), and other registered intermediaries.
Addressing Misleading Claims and an Uneven Playing Field
SEBI Chairman Tuhin Kanta Pandey noted that PaRRVA directly addresses a growing problem of unverified, exaggerated, or misleading past return claims that influence investor decisions, particularly by unregistered market entities. He stated, "We are taking an important step today to strengthen the integrity and transparency of India's securities market. The launch of PaRRVA, Past Risk and Return Verification Agency, introduces a pioneering mechanism for SEBI registered intermediaries to showcase verified past returns to investors."
Current regulations prohibit SEBI-registered intermediaries from showcasing past performance, even when legitimate. This has created an uneven playing field where unregistered players freely advertise unverifiable high returns, drawing in unsuspecting investors. Genuine SEBI-regulated intermediaries cannot present their real track record, limiting investor trust and informed decision-making. PaRRVA is an independent verification mechanism that enables regulated entities to present authentic, validated performance data while eliminating misleading claims that put investors at risk.
Protecting a Vulnerable Investor Base
SEBI's recent investor survey also revealed that only 36 per cent of investors possess adequate market knowledge. Over 62 per cent of prospective investors rely on influencers, while 23 per cent chase quick gains, often without understanding risks. With many investors making decisions based on unverified or promotional claims, transparent and validated performance data becomes crucial. PaRRVA aims to fill this gap by helping investors verify the authenticity of return claims, assess risks more realistically.
A Global Benchmark for Investor Protection
Pandey noted that while many countries recognise the dangers of unverified performance advertising, India is the first to establish an independent mechanism to validate such claims, positioning PaRRVA as a global benchmark for transparency, accountability and Investor protection. He described PaRRVA as a "pioneering mechanism" that enhances the integrity of India's securities market and encourages ethical practices among intermediaries. (ANI)
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