The Securities and Exchange Board of India (SEBI) has operationalised the Past Risk and Return Verification Agency (PaRRVA) framework to enhance transparency in performance claims made by market intermediaries. According to reports from The Hindu BusinessLine, the regulator announced this development through a formal statement, marking a significant step toward improving market transparency and accountability. The framework, issued on April 4, 2025, establishes a comprehensive system for verifying performance metrics across the financial markets.
CARE Ratings Limited has been granted recognition as the PaRRVA, while the National Stock Exchange of India Limited (NSE) will function as the PaRRVA Data Centre (PDC). As reported by The Hindu BusinessLine, these appointments align with the regulatory framework issued on April 4, 2025, establishing the operational structure for the verification system. The framework enables regulated entities such as investment advisers, research analysts, and algorithmic trading service providers to showcase their verified performance metrics. Care Ratings will begin providing PaRRVA services on a regular basis from May 4, 2026, following completion of the pilot phase, with the recognition remaining valid unless revoked or suspended by SEBI.
The initiative is designed to allow regulated entities to present verified performance metrics, while enabling investors to access reliable and standardised data for informed decision-making. As reported by The Hindu BusinessLine, this move is expected to curb misleading claims and bring greater accountability among intermediaries, ultimately strengthening the overall market ecosystem and investor confidence. PaRRVA will validate the past risk and return claims related to investment advisory services, research services and algorithmic trading offerings, with the system designed to improve transparency and curb misleading performance disclosures in the securities market. Additionally, regulated entities will be permitted to use PaRRVA-verified performance in their advertisements, in line with SEBI's regulatory provisions.
SEBI has set specific compliance requirements for market intermediaries seeking to use verified performance data. Investment advisers (IAs) and research analysts (RAs) seeking to communicate certified past performance data to clients have to enrol with PaRRVA within three months of its operationalisation, setting a deadline of August 3, 2026. As per Upstox News Desk, such entities will be allowed to communicate certified past performance data only up to May 3, 2028, after which they can communicate or display only PaRRVA verified risk and return metrics and not the historical data from the pre-PaRRVA period. This phased approach ensures a smooth transition to the new verification system while maintaining continuity for existing performance data.
SEBI has revised the composition of the oversight committee supervising PaRRVA and the PaRRVA Data Centre (PDC) following representations regarding practical challenges. Under the revised norms, the committee will include representatives from PaRRVA, the PDC, intermediaries or regulated entities, a SEBI-recognised investor association, and an eminent individual with regulatory experience as chairperson. As reported by Upstox News Desk, the committee must have at least five members, with independent members forming a majority over representatives of PaRRVA and the PDC, ensuring proper oversight and transparency in the verification process.
