The Securities and Exchange Board of India (SEBI) on Monday launched the Past Risk and Return Verification Agency (PaRRVA), a new mechanism that will independently verify historical returns of registered market intermediaries.
Developed with a recognised stock exchange acting as the PaRRVA Data Centre and a SEBI-registered credit rating agency serving as the verifier, the initiative is positioned as a first-of-its-kind system to improve transparency in India’s securities market.
Announcing the launch, SEBI Chairman Tuhin Kanta Pandey said the agency would set “a pioneering mechanism for SEBI-registered intermediaries to showcase verified past returns to investors. With the launch of PaRRVA, India will be setting a new international benchmark for transparency, accountability and investor protection.”
PaRRVA introduces a standardised framework for validating performance claims made by Investment Advisers (IAs), Research Analysts (RAs) and stockbrokers offering algorithmic trading services. The regulator expects the platform to help counter unverified or exaggerated claims that have become increasingly common among unregistered operators and finfluencers.
Pandey said that unregistered entities often lure investors through exaggerated performance claims while regulated intermediaries are restricted from citing past returns. Performance reporting has long posed challenges, with “finfluencers often luring investors with exaggerated or fabricated returns” and “unscrupulous intermediaries further fuelling investor uncertainty with exaggerated claims,” he said.
Findings from SEBI’s recent investor survey, shows that only 36 per cent investors possess adequate knowledge about the securities market, nearly 62 per cent prospective investors making decisions based on finfluencer recommendations, and 23 per cent primarily triggered by the possibility of quick gains. These gaps, he said, strengthen the case for “credible performance data to manage expectations and promote responsible investing.”
Explaining the framework, Pandey said PaRRVA is built on the idea that “investors deserve performance numbers they can trust.” The verification will be performed jointly by the PaRRVA agency and the Data Centre using a transparent and standardised methodology. Intermediaries will not be allowed to selectively display favourable periods, as arbitrary selection of dates or time-periods to present favourable outcomes will not be permitted.
PaRRVA will be monitored by an oversight committee focused on ensuring adherence to the verification methodology and maintaining data privacy. Initially, the system will cover IAs, RAs and algotrading brokers, with verified performance to be presented in a uniform format with clear disclosures.
Pandey said the agency’s digital audit trails, reduced mis-selling and consistent reporting standards will help strengthen trust in India’s markets.