The Securities and Exchange Board of India (SEBI) on Friday issued the framework for Past Risk and Return Verification Agency (PaRRVA) — a performance validation body that will verify claims on performance by research analysts, investment advisors, and algo providers.
A credit rating agency (CRA) will be recognised as the PaRRVA if it has been in existence for 15 years, has a net worth of ₹100 crore, and at least 250 issuers should have obtained ratings for debt securities.
The CRAs have to apply to SEBI for recognition and enter into an agreement with a stock exchange that has been recognised as a data centre. Following in-principle approval, the CRA would have to develop the infrastructure within three months.
After an agency is recognised as PaRRVA, the concerned CRA and stock exchange will initiate the verification services of risk-return metrics in respect of services of regulated persons, on a pilot basis for a period of two months. While data centre’s services can be availed, the responsibility of the verification of returns claims, and risk-return metrics will lie with PaRRVA.
A stock exchange will be eligible to be a data centre if it has been in existence for 15 years, and has a net worth of ₹200 crore. Further, there will be an oversight committee to monitor the activities of both the PaRRVA and the data centre.
The PaRRVA will be responsible for defining verification methodologies, managing disputes and grievances, and maintaining records of verified data for at least five years.
Published on April 4, 2025
