Sebi Urges Brokers to Join Past Return Verification Platform PaRRVA

The Securities and Exchange Board of India (Sebi) is actively encouraging brokerage firms to participate in its Past Risk and Return Verification Agency (PaRRVA) platform. Despite the platform going live in May, brokerage firms' involvement remains limited, partly due to concerns about the costs involved and the platform's relatively low adoption rate.

PaRRVA was approved by Sebi last year as a measure to independently verify the historical risk and return data shared by market intermediaries. These intermediaries include research analysts, investment advisers, and algorithmic trading providers. The goal of this initiative is to provide a trusted source of performance data that these professionals can present to their clients.

Care Ratings has been appointed as the verification agency, while the National Stock Exchange (NSE) serves as the platform’s data center. The collaboration underlines Sebi’s aim to enhance transparency and foster trust in the financial advisory ecosystem.

As of now, only four qualified stock brokers (QSBs) have signed up to the platform. These are Groww, HDFC Securities, Angel One, and SMC Global. Alongside them, around 370 intermediaries have registered, comprising approximately 250 research analysts and 110 investment advisers.

However, these numbers are modest compared to the total population of intermediaries. Sebi’s website lists about 2,270 registered research analysts and 1,048 investment advisers, indicating that a significant portion of the market has yet to join PaRRVA.

Commercial reporting on the platform was launched in September, several months after the platform became operational. Despite Sebi’s efforts to promote broader adoption, brokerages remain cautious, citing the high annual fees required to participate.

A senior executive from a domestic brokerage, who requested anonymity, commented on the cost factor. He noted that the platform’s annual charges approach ₹1 crore, which is a substantial financial commitment that may deter many firms from enrolling. This fee structure is perceived as a barrier to wider acceptance within the industry.

The pricing model for the platform varies depending on the type of intermediary. Qualified stock brokers offering advisory or analyst services can choose between a fixed fee of ₹1 crore per year or opt for a usage-based plan, which charges ₹12.5 lakh for each recommendation type, such as portfolio calls, rebalancing, and various trading strategies.

Non-QSB brokers or trading members face fees of ₹40 lakh annually or ₹5 lakh per recommendation, with reduced rates for those managing fewer clients.

Pankaj D Prasade, Director and Head of PaRRVA at CARE Ratings, stated that onboarding has been steady since the commercial launch in May 2026. He added that Sebi remains supportive of the industry's efforts to increase participation, emphasizing that wider adoption would enhance transparency and benefit the entire market ecosystem.

Under PaRRVA’s framework, all investment advisers and research analysts must register and channel their investment recommendations through the platform during a 90-day 'cooling-off' period. Following this, verified performance figures can be displayed on PaRRVA’s portal as well as on the intermediaries’ own websites.

Given that many brokerage houses have multiple analysts issuing recommendations across various trading horizons and methodologies—including intraday, short-term, fundamental, and derivatives calls—their engagement with PaRRVA could significantly improve the credibility and clarity of past performance data presented to investors.

In April, Sebi issued a circular mandating that investment advisers and research analysts who wish to communicate certified past performance data to clients must register with PaRRVA within three months of the platform’s operational start. Failure to comply means they would be barred from sharing certified past returns with clients.

Furthermore, two years after PaRRVA’s launch, Sebi requires that only performance metrics verified through PaRRVA can be communicated or displayed. Data predating the platform’s operationalization will no longer be valid for client communications, reinforcing Sebi’s push for standardized and verified disclosures.

This initiative is part of Sebi’s broader strategy to improve market integrity and protect investors by ensuring that performance claims made by market intermediaries are independently verified and transparent. The move aligns with global trends where regulators seek to tighten oversight over financial advice and disclosures, enhancing trust in capital markets.