Independent research analysts to soon come under Sebi purview

The move is being undertaken to ensure greater credibility and accountability in the conduct of independent research analysts

GN Bureau | October 21, 2013



The securities and exchange bureau of India (Sebi) is considering bringing in the ‘independent’ research analysts covering the Indian stock markets under its ambit in an attempt to minimise the risk of individuals/companies manipulating share price movements.

According to a report in The Economic Times, in addition to entities like brokerage firms, investment banks and fund houses, the markets watchdog is planning to regulate the ‘independent’ research analysts as well. According to a senior Sebi official, the markets watchdog is in the process of preparing a detailed code of conduct and guidelines to be followed by the 'independent' research analysts. The move is being undertaken to ensure greater credibility and accountability in the conduct of independent research analysts.

The move comes after Sebi had issued separate investment advisor regulations earlier this year. These regulations only covered registered individuals and entities providing research and consultancy services for a fee and this regulatory gap was being exploited by individuals and entities who did not wish to be registered with Sebi.

Hence, the markets watchdog has decided to issue separate guidelines for all kinds of research analysts including those operating independently, the official said.

Several recommendations have been made to Sebi in this regard by its international advisory board and the international organisation of securities commissions (IOSCO).

Among the new measures proposed, analysts could be directed to make detailed disclosures about their shareholding pattern, incentive structure, market dealings, and various direct and indirect business interests. Certain mechanisms ensuring that the trading activities and business interests of research analysts do not affect their reports could also be put in place.
 

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