Section 17 in Securities and Exchange Board of India (Investment Advisers) Regulations, 2013
17. Suitability.
- Investment adviser shall ensure that, -(a)All investments on which investment advice is provided is appropriate to the risk profile of the client;(b)It has a documented process for selecting investments based on client's investment objectives and financial situation;(c)It understands the nature and risks of products or assets selected for clients;(d)It has a reasonable basis for believing that a recommendation or transaction entered into:(i)meets the client's investment objectives;(ii)is such that the client is able to bear any related investment risks consistent with its investment objectives and risk tolerance;(iii)is such that the client has the necessary experience and knowledge to understand the risks involved in the transaction.(e)Whenever a recommendation is given to a client to purchase of a particular complex financial product, such recommendation or advice is based upon a reasonable assessment that the structure and risk reward profile of financial product is consistent with clients experience, knowledge, investment objectives, risk appetite and capacity for absorbing loss.
