Authored by LakshmiNarasimhan Srikrishna
SEBI through its circular dated 30 October 2025 (HO/38/12/11(1)2025-MIRSD-POD/I/73/2025) (“Circular”), has introduced an interim framework enabling Investment Advisers (“IAs”) and Research Analysts (“RAs”) to communicate certified past performance data to clients for periods prior to the operationalisation of the Past Risk and Return Verification Agency (“PaRRVA”). The Circular bridges the transition period until PaRRVA becomes fully operational and begins verifying performance metrics prospectively.
Background
SEBI’s earlier circular dated 4 April 2025 established the framework for creation and operationalisation of PaRRVA, a specialised agency intended to verify risk and return metrics of IAs and RAs, proposed to be used for the purpose of displaying results to existing/ prospective clients. Under its framework, PaRRVA would verify performance only for the period after an IA/RA is on-boarded with PaRRVA.
IAs and RAs submitted requests to SEBI seeking permission to share pre-PaRRVA performance data with clients, especially prospective clients requesting historical results as part of due diligence before engaging an adviser or analyst, in the interim and for a period after implementation of PaRRVA.
In this light, SEBI has introduced the following temporary measures to facilitate communication of past performance during the transition to PaRRVA:
1. Certified Past Performance Allowed on Client Request: IAs and RAs may provide past performance data only upon a specific request from a client or prospective client, provided that such data must be certified by a member of ICAI or ICMAI, ensuring reliability and uniformity of computation.
2. One-to-One Communication Only: Certified past performance data is to be shared only on a one-to-one basis with the requesting client and shall not be published or made available to the general public through websites, public media, marketing material, or any other form of broad communication. This restriction preserves the principle that performance claims should not be used as mass marketing tools. The IA or RA making such communication, shall make a disclaimer (verbatim as contained in the Circular) to the client.
3. Mandatory Enrolment with PaRRVA: Any IA/RA wishing to use certified past performance under this interim arrangement must enrol with PaRRVA within three months from the date PaRRVA becomes operational, failing which the IA/RA will be rendered ineligible to communicate certified historical performance thereafter.
4. Applicable Period of Performance Data: The permitted past performance data must relate only to periods prior to PaRRVA’s operational date. Performance of the IA/ RA after the implementation of PaRRVA may be advertised or communicated only using PaRRVA-verified risk and return metrics.
5. Complete Transition to PaRRVA After Two Years: After two years from PaRRVA’s beginning operations:
a. IAs and RAs may communicate/display only PaRRVA-verified risk and return metrics;
b. use of any pre-PaRRVA past performance data will no longer be permitted in any form of communication.
This creates a clear time-bound shift toward a fully verified, standardised performance disclosure regime.
Further, SEBI has directed the Investment Adviser Administration and Supervisory Body and the Research Analyst Administration and Supervisory Body to develop and publish, within one month, the templates for certified past performance disclosures. These templates must be finalised in consultation with the relevant Industry Standard Forums and SEBI.
