Framework For Centralized Fee Collection Mechanism (CeFCoM) For Investment Advisers (IA) &Research Analysts (RA)

SEBI vide circular no. SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/120 dated September 13, 2024, has introduced an optional mechanism for collection of fees by SEBI Registered lAs and RAs from their clients, called ‘Centralized Fee Collection Mechanism (CeFCoM) for IA and RA’. The mechanism shall differentiate unregistered entities from SEBI registered IA/RAs and provide clarity to clients that the fees are being paid to a SEBI registered IA/ RA.

SEBI, in aforementioned circular, has directed BSE Limited – Administration and Supervisory Body (ASB) for IA and RA i.e. IAASB and RAASB to operationalise the CeFCoM and specify the operational framework in this regard. Accordingly, the operational framework has been provided as follows:

1. IAs/RAs shall provide details of their designated bank account/s (maximum two accounts) to ASB in which payment of fees from its clients shall be received. The designated bank account/s shall be exclusively used for collecting fees from clients for availing their services as an IA/ RA. One of the designated bank account shall serve as default bank account for collection of fees. IA/RA shall have an option to change the default account.
2. CeFCoM shall be operationalised in two phases. In the first phase, it shall be operationalized for IAs/RAs having non- fintech flow i.e. IAs/RAs who do not have an end-to-end digital process through website/app/or such other means for client on-boarding, delivery of services to clients, payments of fees and other related processes. CeFCoM Phase 1 shall be operational with effect from October 1, 2024.
3. CeFCoM Phase 2 shall be operationalized for IAs/RAs having fintech flow i.e. IAs/RAs who have an end-to-end digital process through website/app/or such other means for client on-boarding, delivery of services to clients, payments of fees and other related processes. The modalities, process flow and timelines, in this regard, shall be intimated separately.
4. IAs/RAs, having non-fintech flow, can either share the requisite details on the designated portal under CeFCoM using file upload or may have an API (Application Programming Interface) connect for this purpose.
5. The payment modes for collection of fees, under the mechanism, have been provided below:

6. IAs/RAs shall be required to provide the details of their clients to CeFCoM so that the payment links/ payment confirmation/ details of Virtual Account Number, etc. can be shared with the clients. IAs/RAs shall obtain consent from their clients for sharing their details with CeFCoM.

7. The mechanism is optional for IAs/RAs and their clients. For enrolment under CeFCoM, IA/RA may follow the following process:

For enrolment under CeFCoM, the IA/RA must be enlisted with IAASB/RAASB and must have an Enlistment number.

Stepl: IA/RA to enlist them on BSE Portal Link: https://membershipraia.bseindia.com/

Step 2: IA/RAs will be provided with SEBI Registration No. and BSE Enlistment No.

Step 3: Post Enlistment, CeFCoM tab shall be enabled for enlisted IA/RAs

Step 4: IAs/RAs may refer the process flow and user manual for CeFCoM (Annexure I & II respectively)

For any queries in this regard, you may contact on:

For IAs – [email protected] 022 22725854/8631

For RAs – [email protected] 022 22725854/8631

8. Apart from providing additional recognition to an IA/RA of being a registered intermediary, the mechanism intends to provide following major advantages:

a) Multiple modes for collection of fees from clients

b) Intimation to an IA/RA regarding when a client payment falls due

c) Facility to schedule payment of fees as per convenience of IA/RA and its clients

d) Master data of clients and their fee payment status

e) Facility to track payment of fees by a client

f) Given above, all enlisted IAs/RAs are encouraged to avail the proposed mechanism and enroll under CeFCoM. IAs/ RAs are also advised to spread awareness about CeFCoM among their clients and encourage them to avail this mechanism. IAs/RAs may educate their clients about the advantages of the mechanism.

g) The user manual for IAs/RAs for availing the services of this mechanism is provided at Annexure—II.

Meghana Kulkarni Deputy General Manager Membership Department

Neeky Subramaniam Associate Manager Membership Department