Bengaluru: In a bid to encourage formal routes of investment and check the rise of unregulated financial influencers, Zerodha Broking Ltd has mandated advisory certification for authorized persons (APs) who engage with investors on behalf of the stockbroker. It has asked all the APs to clear the first level of investment advisory certification, NISM Series X-A, which is mandatory for candidates aspiring to become registered investment advisors (RIAs). In addition, APs will also be required to come for an interview at Zerodha’s office as part of the application process.
The move comes in light of the Security and Exchange Board of India’s (SEBI) decision to forbid social media financial influencers or ‘finfluencers’ from offering investment advice on social media platforms. The broking industry leverages the power of influencers to grow its business and in return, the influencers earn referrals or commissions from brokers. Previously in August, Zerodha put a stop to this system after the National Stock Exchange (NSE) mandated that all referral fee earners need to be registered as APs. This is because APs sign written agreements, making stockbrokers directly accountable for their actions. This prohibits them from receiving or paying any money or securities in their name or account.
Earlier in July, SEBI mandated bifurcation between regulated and unregulated entities. It also ordered that financial links such as affiliate commissions be put to an end.
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