• The Securities and Exchange Board of India (SEBI) has proposed a self-regulatory organisation (SRO) for the growing number of investment advisers to address issues related to the quality of advice given to investors by such entities.
• SRO would be defined as an organisation of intermediaries or an entity promoted by a stock exchange, recognised by the board.
• .As per the proposed process, instead of inviting applications, Sebi would recognise an entity as an SRO on nomination basis, after conducting due diligence.
• Sebi proposes to constitute a nomination committee to consider and give recommendation to the regulator regarding the suitability of an organisation or entity to be recognised as an SRO.

About SRO:

• Sebi has divided SRO’s functions into four broad categories. First, the SRO will have a development role covering training and education of its members and investor awareness.
• Second, it will have a regulatory role, granting membership and laying down a code of conduct for its members.
• Third, it will have a grievance redressal role, resolving disputes between members and investors and between members themselves.
• Finally, it will have a disciplinary role, wherein it can take action against members for violation of the code of conduct or regulations. The SRO will have the power to suspend individuals and entities from their membership or remove them altogether but not to impose monetary penalties. It would have the power to resolve disputes between members and between investors and members. However, the SRO for mutual fund distributors will not have the power to handle disputes between its members and mutual funds.