In a consultation paper released on Thursday, the market regulator proposed amendments to the Sebi (Certification of Associated Persons in the Securities Markets) Regulations, 2007, which govern the qualification and certification requirements for individuals working in the securities industry.
The move seeks to modernize a framework that has stayed largely unchanged for over a decade, even as India’s capital markets have expanded to include new intermediaries, digital platforms, and hybrid business models.
Mint explains what these changes mean and why they are required.
Who is an “associated person”?
Sebi has proposed to expand the definition of “associated person”, which right now refers to any person who is engaged or employed by a registered intermediary, or an agent, or distributor or any other person in any activity related to the securities market.
The regulator has proposed adding the terms “regulated entity”, “intending to be engaged”, and “directly or indirectly” to the definition. This would bring within its fold not only people already working with registered intermediaries but also those who plan to enter the industry or operate in loosely regulated corners of the market.
“Today, you have people claiming to be bankers or agents for start-ups, AIFs, etc who are neither registered with Sebi nor accountable to any oversight. Many collect fees or even equity under the guise of facilitating investments. Sebi’s move is meant to address such deficiencies,” said Siddharth Pai, founding partner, chief financial officer and ESG officer at 3one4 Capital, a venture capital firm.
Currently, only specific categories of personnel are required to obtain certification from the National Institute of Securities Markets (NISM), such as mutual fund distributors, research analysts, investment advisers and compliance officers. Under the new proposal, Sebi would have greater flexibility to designate new categories of professionals who must be certified.
What is the new proposed certification pathway?
Sebi has proposed allowing long-term academic courses offered by National Institute of Securities Market (NISM) to serve as an alternative to the existing examination-based certification process.
Currently, most NISM certifications require candidates to clear standardized tests every few years. Under the proposed system, individuals completing a three-month or longer course at NISM could be deemed certified for their respective market roles.
These courses would focus on practical knowledge and an in-depth understanding of market functions. Sebi has also proposed that all certification-related processes, such as applications, renewals, and record maintenance, be enabled electronically to improve efficiency and accessibility.
Industry experts said the examination system is quite outdated and that conferences and workshops can be another tool to ensure market professionals are equipped and trained properly. Such workshops are common in markets abroad that do not rely on examinations.
Why are these changes needed?
Sebi said certain people associated with the securities market do not fall under the ambit of “associated person” anymore. The introduction of new products and services by the market regulator has created new categories of “regulated entities”, but the term has not yet been defined.
It required such new players to have relevant knowledge and expertise to be able to participate in the market. The changes are also expected to encourage the participation of students in the securities market who would be included under the phrase “intending to be engaged”.
The addition of longer-term courses is expected to provide better options to market participants while also providing holistic education. The course, which can run for three months or more, will be a new way to obtain the NISM certificate.
NISM is the educational arm of Sebi and provides certifications that are mandatory for many professionals who work in the Indian securities market and help demonstrate an individual’s knowledge.
Why discontinue exemptions for senior professionals?
Sebi has also proposed to discontinue present exemptions that allow senior market professionals or experienced personnel to bypass certification requirements.
At present, certain senior executives, such as directors or long-serving officers, are exempt from obtaining NISM certification. Sebi now believes such carve-outs are inconsistent with its objective of uniform competency standards.
“A single year’s work repeated for twenty years is not 20 years of experience. Markets, participants, regulations, etc. change – it takes practical experience and learning to excel. We need to stop aggrandizing age as competence or experience,” Pai said.
However, to give due consideration to age and relevant work experience, it is proposed that individuals who are at least 50 years old and possess a minimum of 10 years of relevant experience may be granted certain exemptions in the certification process.
Such individuals may obtain certification by accumulating classroom credits through attending NISM-specified subjects, or by completing a long-term course or program as prescribed by NISM.
What can we expect next?
Industry experts expect pushback from market participants, who may perceive these proposals as stricter compared to older norms.
In the consultation paper, Sebi has mentioned the introduction of new products, creating expectations within the industry that the regulator might launch new financial instruments in the next few years.
The deadline for public comments for the consultation paper is 27 November 2025.
