Securities and Exchange Board of India (SEBI) has launched a new verification agency 'Past Risk and Return Verification Agency' (PaRRVA) to increase transparency in the Indian financial market.
This agency will check the veracity of past return claims made by market related organizations. CARE Ratings and NSE jointly launched PaRRVA as a pilot project on Monday. This initiative will help investors get accurate and reliable information.
What is PaRRVA and who can use it?
During the launch event, SEBI Chairman Tuhin Kant Pandey said, PaRRVA will serve as a leading framework. This will allow SEBI-registered investment advisors, research analysts and algorithmic stock brokers to present their previous return claims to investors after scrutiny. This will provide investors with accurate and reliable data.
This new system will reduce the risk of fininfluencers and misleading claims. According to Pandey, many unregistered individuals and fininfluencers in the market are luring investors with false or high returns claims.
Pandey said that if a registered intermediary (such as an investment advisor, research analyst) communicates its verified data to investors, investors can take more accurate and appropriate decisions.
How will PaRRVA verify the return?
Under the new structure, PaRRVA will operate at two levels:
- A SEBI-registered credit rating agency will act as PaRRVA.
- A recognized stock exchange will act as PaRRVA Data Center (PDC).
Importantly, the intermediary will not be allowed to show only periods of good performance. “Investors should get figures they can trust,” said Pandey.
An 'oversight committee' will monitor the agency and the data centre
An 'oversight committee' will oversee both the agency and the data centre, ensuring compliance with regulations and maintaining data privacy. Apart from the program, Pandey said, SEBI will change the rules of data usage for educational purposes, so that the live data currently available is not misused.
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