Complete guide to SEBI's model portfolio framework for Research Analysts. Learn about compliance requirements, benchmarking mandates, disclosure obligations, and the June 30, 2025 deadline.
SEBI Model Portfolio Regulations 2025: Everything Research Analysts Must Know
model portfolio platforms have become the primary product offering for SEBI-registered Research Analysts in India. With the regulatory landscape evolving rapidly through 2023-2025 amendments, understanding exactly what you can and cannot do — and how to stay compliant — is essential for every RA running a model portfolio business.
This guide provides a complete overview of every SEBI regulation that governs model portfolios, including recent changes, practical compliance guidance, and how to structure your practice for long-term regulatory sustainability.
The Regulatory Foundation: SEBI (Research Analysts) Regulations, 2014
Model portfolios offered by Research Analysts are governed primarily by the SEBI (Research Analysts) Regulations, 2014 and subsequent amendments. Key provisions include:
Regulation 2(1)(u) — Definition of Research Analyst
A Research Analyst is any person who is primarily engaged in preparing or publishing research reports with respect to securities listed or to be listed, and provides opinions regarding the future pricing or value of securities. Offering model portfolios — curated collections of stock recommendations with specific weightages — falls squarely within this definition.
Regulation 3 — Registration Requirement
No person shall act as a research analyst or hold themselves out as a research analyst unless they hold a certificate of registration from SEBI. Offering model portfolios without SEBI RA registration is a violation of the SEBI Act and attracts criminal penalties including imprisonment of up to 10 years and fines up to Rs 25 crore.
What RAs Can and Cannot Do with Model Portfolios
Permitted Activities
- Create model portfolios: Curate stock selections with defined weightages based on your research
- Publish recommendations: Issue buy, sell, hold, add, or reduce recommendations for model portfolio stocks
- Set portfolio rebalancing software schedules: Define and communicate periodic rebalancing (monthly, quarterly, event-driven)
- Charge subscription fees: Collect flat fees from subscribers for access to the model portfolio
- Provide research rationale: Share detailed analysis supporting each stock recommendation
- Track and publish performance: Display portfolio returns against benchmarks with proper disclaimers
- Offer multiple portfolios: Run multiple model portfolios across different strategies or risk profiles
Prohibited Activities
- Personalised advice: Cannot customise recommendations for individual subscribers — model portfolio must be the same for all
- Managing client money: Cannot pool or manage client funds; stocks must be in the subscriber's own Demat account
- Performance-linked fees: Cannot charge fees based on portfolio returns or profit-sharing
- Guaranteed returns: Cannot promise or guarantee specific returns from the model portfolio
- multi-broker integration on behalf: Cannot place trades in client accounts without proper power of attorney and broker framework (model portfolios should be advisory, not discretionary)
Fee Structure Regulations
SEBI's framework on RA fee structures has evolved significantly:
- Flat fees are permitted: RAs can charge fixed subscription fees (monthly, quarterly, annually)
- Asset-based fees are debated: The 2025 amendments clarify fee structures — consult current SEBI circulars for the latest position
- Performance fees are prohibited: No profit-sharing or performance-linked compensation
- Fee disclosure: All fees must be disclosed upfront before client onboarding software. The fee structure must be part of the MITC document.
- No hidden charges: The subscription fee must cover all services. Additional charges for specific recommendations, premium stocks, or portfolio changes are not permitted unless clearly disclosed upfront.
Disclosure Requirements
Disclosure is the cornerstone of SEBI's RA regulatory framework. For model portfolios, RAs must disclose:
At the Time of Each Recommendation
- Whether the RA or their relatives hold positions in the recommended stock
- Whether the RA has any financial interest in the company being recommended
- Whether the RA has received compensation from the company in the past 12 months
- The general risk factors associated with the recommendation
- Historical track record with proper disclaimers
Ongoing Disclosures
- Any material change in the RA's financial interest in recommended stocks
- Changes to the model portfolio methodology
- Changes to fee structure (with advance notice to subscribers)
- SEBI registration status and any regulatory actions
On Website/Marketing Materials
- SEBI registration number prominently displayed
- Standard risk disclaimers ("Investment in securities market is subject to market risks...")
- Disclosure that past performance does not guarantee future results
- Complete fee structure
- Complaint resolution mechanism
Client Agreement and MITC Requirements
Since February 2025, every RA must have a comprehensive subscriber agreement incorporating the MITC (Most Important Terms and Conditions) document:
- Clear description of services offered (what model portfolios include and exclude)
- Complete fee structure with payment terms
- Refund/cancellation policy
- Risk disclaimers and limitations of liability
- Data privacy and confidentiality obligations
- Complaint escalation mechanism (RA → BSE → SEBI)
- Governing law and dispute resolution
Record Keeping Obligations
SEBI requires RAs to maintain comprehensive records for a minimum of 5 years:
- All research reports and model portfolio recommendations
- Complete communication records with clients
- Client KYC documents and subscriber agreements
- Complaint register and resolution records
- Financial records including fee receipts
- Compliance audit reports
- Disclosure documents and their versions
- Marketing materials and advertisements used
Platforms like AlphaQuark automate much of this record keeping, maintaining timestamped audit trails of all portfolio changes, client communications, and compliance documents.
Advertisement and Social Media Guidelines
Under Regulation 16 and subsequent clarifications, RAs must follow strict rules when marketing model portfolios:
- No guaranteed returns: Cannot state or imply that specific returns will be achieved
- Past performance disclaimers: Any performance data must include "Past performance does not guarantee future results"
- Balanced presentation: Cannot show only positive periods — if you show returns, include maximum drawdown and periods of underperformance
- No misleading comparisons: Cannot compare your model portfolio returns with inappropriate benchmarks
- Client testimonials: Can be used but must include disclaimer that individual results may vary and must have written client consent
- Registration number: Must be displayed in all marketing materials
- Social media: All social media posts containing recommendations must include standard disclaimers
Complaint Handling Framework
SEBI mandates a structured complaint resolution process:
- Level 1 — RA Resolution: Subscriber complaints must first be addressed by the RA. Response within 21 days is expected.
- Level 2 — BSE Administration: If unresolved, complaints can be escalated to BSE's RA/IA administration platform
- Level 3 — SEBI SCORES: Further escalation to SEBI's SCORES portal for regulatory intervention
- Level 4 — SAT: Securities Appellate Tribunal for appeals against SEBI orders
RAs must maintain a complaint register documenting every complaint received, actions taken, and resolution status. This register is reviewed during SEBI inspections and annual compliance audits.
Annual Compliance Audit
All SEBI-registered RAs must undergo an annual compliance audit conducted by a practicing Chartered Accountant or Company Secretary. The audit covers:
- Registration and qualification compliance
- Client agreement and KYC compliance
- Disclosure compliance for all recommendations
- Record keeping adequacy
- Complaint handling compliance
- Fee structure compliance
- Marketing and advertising compliance
- Net worth maintenance
The audit report must be submitted to SEBI/BSE within 6 months of the financial year end.
Penalties for Non-Compliance
| Violation | Penalty |
|---|
| Operating without registration | Imprisonment up to 10 years, fine up to Rs 25 crore |
| Fraudulent/misleading recommendations | Suspension/cancellation of registration, monetary penalty |
| Failure to disclose conflicts of interest | Warning, monetary penalty up to Rs 1 crore |
| Inadequate record keeping | Regulatory action, monetary penalty |
| Non-compliance with advertising guidelines | Warning, suspension of registration |
| Failure to handle complaints | SEBI enforcement action |
Conclusion
Running a model portfolio business as a SEBI-registered Research Analyst requires thorough understanding of the regulatory framework and disciplined compliance practices. The regulations are designed to protect investors while enabling RAs to build legitimate, scalable advisory businesses. Focus on proper disclosures, maintain meticulous records, handle complaints professionally, and invest in technology that automates compliance workflows. The RAs who thrive long-term are those who view compliance not as a burden but as the foundation of trust that sustains their business.
Grow Your Advisory Practice with AlphaQuark
AlphaQuark provides a complete model portfolio platform for SEBI-registered Research Analysts and RIAs. From automated rebalancing to multi-broker integration and SEBI compliance tools — everything you need to scale your advisory practice.
Frequently Asked Questions
Can I charge different fees for different model portfolios?
Yes. SEBI permits RAs to charge different subscription fees for different model portfolios, provided each fee structure is clearly disclosed upfront in the subscriber agreement and MITC document. For example, you might charge Rs 15,000 per year for a large-cap model portfolio and Rs 30,000 per year for a small-cap portfolio. What you cannot do is charge different fees to different subscribers for the same portfolio (discriminatory pricing) or charge hidden fees not disclosed in the agreement.
Do I need to disclose my personal holdings in model portfolio stocks?
Yes, this is mandatory under SEBI RA Regulations. At the time of each recommendation and in your research reports, you must disclose whether you or your relatives hold positions in the recommended stocks, whether you have any financial interest in the companies, and whether you have received any compensation from these companies in the past 12 months. This disclosure must be specific and timely — a general disclaimer is not sufficient. Many RAs include this disclosure in every rebalancing alert and on their website.
What is the maximum number of model portfolios an RA can offer?
SEBI does not prescribe a maximum number of model portfolios. You can offer as many as you can manage competently. However, practical considerations limit most RAs to 2-5 portfolios. Each portfolio requires ongoing research, monitoring, rebalancing, performance tracking, and client communication. Offering too many portfolios dilutes your research focus and makes it difficult to maintain quality. Additionally, each portfolio's compliance documentation must be maintained separately, increasing your administrative burden.
Can I offer a free model portfolio to attract subscribers?
Yes, offering a free or trial model portfolio is not prohibited by SEBI, provided you maintain the same compliance standards as for paid portfolios — including proper disclaimers, disclosures, and record keeping. Many RAs offer a free long-term portfolio with limited stocks while charging for more active or specialised portfolios. However, you must ensure that the free portfolio is not used as a vehicle for misleading marketing — for example, showing only the free portfolio's best-performing stocks while hiding underperformers.
What happens if a subscriber loses money following my model portfolio?
Investment losses are inherent to securities markets, and SEBI does not hold RAs liable for market losses if the RA has followed proper procedures. Your protection comes from proper compliance: clear risk disclosures at onboarding, no guaranteed return promises, documented research rationale for every recommendation, proper disclaimers in all communications, and a signed subscriber agreement acknowledging market risks. If a client complains about losses, respond professionally, document your response, and ensure your research process and disclosures were adequate. The key is that your recommendations were based on proper research methodology and all required disclosures were made.