You may now refer to past performance in advertisements, but only with metrics verified by a recognised PaRRVA and presented in the manner SEBI specifies.
On 4 April 2025 SEBI amended the Master Circular for Research Analysts so that you can refer to past performance in your advertisements. The condition is that the risk-return metrics must be verified by a Past Risk and Return Verification Agency (PaRRVA). The circular took effect immediately.
Until now, para 8.1(c)(xii) of the Master Circular for Research Analysts dated May 21, 2024 barred you from referring to past performance in advertisements. That clause now prohibits any reference to past performance or risk-return metrics unless PaRRVA has verified them and your claim follows the manner SEBI specifies. Unverified performance claims remain prohibited.
You cannot use this straight away. A PaRRVA will be a credit rating agency recognised by SEBI, working with a stock exchange that acts as its data centre (PDC). The CRA first gets in-principle approval, then has three months to set up its systems, then gets final recognition. Verification then runs as a two-month pilot, which SEBI may extend. Verified metrics will not be public during the pilot. The circular does not name any PaRRVA or give a date when one will be operational.
To get verified, you will send your recommendations to the PDC, either when you give them to clients or at the end of the day, depending on the type of recommendation. This will be through an API or file upload. You must share accurate, complete and timely data with the PDC. RAASB has the same obligation. The PaRRVA and PDC will set the mode and frequency of sharing, and you may need to sign a tri-partite or multi-lateral agreement for it.
How you may present verified metrics The rules in Annexure B stop you from showing only your best results. In practice: - You cannot show the metrics of one portfolio or stock alone if you recommended several in that period. - Claims on single stock, derivative or intraday recommendations must cover all of them, with the number and range of positive and negative returns. - Those claims cannot name any specific stock or derivative. - Metrics must be for specified periods. You cannot pick dates that flatter your results. - Printed material must carry the overall summary of your metrics as provided by PaRRVA. - Every claim, electronic or physical, must carry a link or QR code to your overall summary on the PaRRVA website. - You may show metrics on your advice and recommendations, but not client-specific returns.
Every claim using verified metrics must also carry the disclaimers in Annexure C. These state that the information is for reference only, that past performance is not indicative of future results, that verified returns do not guarantee any assured returns, that verification is not an assurance of your regulatory compliance, and that a client's actual return may differ from the verified return. If you break the presentation rules, SEBI may take enforcement action under Chapter V of the Intermediaries Regulations.
If you have a dispute with the PaRRVA, you raise it through the PaRRVA's own mechanism, then appeal to its Oversight Committee, then go to the ODR portal. Investor complaints about your verified metrics go through SCORES. The circular does not set the fee for verification. It says only that the Oversight Committee will monitor the charges and try to keep them reasonable.
““Reference to past performance or risk-return metrics in respect of the services of Research Analyst unless such risk-return metrics are verified by Past Risk and Return Verification Agency (PaRRVA) and claims using such metrics are made in the manner specified by SEBI.””
Recognition and operationalization of Past Risk and Return Verification Agency (PaRRVA), paragraph 41
The document
Recognition and operationalization of Past Risk and Return Verification Agency (PaRRVA) on sebi.gov.in.
This summary is prepared from the SEBI document linked above. Read the original before you act on it.