TaxTMI 
TaxTMI 
Frequently Asked Questions (FAQs) related to regulatory provisions for Research Analysts
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....onsultation (wherever found appropriate). For full particulars of laws governing the Research Analysts (RAs), please refer to the Acts/ Regulations/ Guidelines/ Circulars, etc. appearing under the Legal Framework Section of SEBI website. For an interpretation of a specific provision of the Regulations, informal guidance may be sought as specified under SEBI (Informal Guidance) Scheme 2003. 4. Based on the representations received from RAs/research entities and to ensure ease of compliance, it has been decided that RAs/research entities shall now ensure the compliance with the following- i. Persons associated with research services shall obtain the relevant certification from NISM as specified by SEBI within one year from the date of this circular. ii. Consent by signature on the terms and conditions including most important terms and conditions (MITC) shall not be mandatory for the clients who are institutional investors or qualified institutional buyers. However, RAs/research entities are required to disclose the terms and conditions of research services including MITC to these clients. 5. This circular is issued in exercise of powers conferred under ....
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....research services if - (i) these personnel while performing these activities do not have client contact, or (ii) these activities have no connection with the research services provided as a RA. 4. What are the communications excluded from the definition of research report? "Research report" does not include the following communications: - i. comments on general trends in the securities market; ii. discussions on the broad-based indices; iii. commentaries on economic, political or market conditions; iv. periodic reports or other communications prepared for unit holders of Mutual Fund or Alternative Investment Fund or clients of Portfolio Managers and Investment Advisers; v. internal communications that are not given to current or prospective clients; vi. communications that constitute offer documents or prospectus that are circulated as per regulations made by SEBI; vii. statistical summaries of financial data of the companies; viii. technical analyses relating to the demand and supply in a sector or the index; ix. any other communication which SEBI may specify from time to time....
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....rmediaries are covered under the definition of 'research entity'. 10. Who are exempted from making application for grant of registration under RA Regulations? Investment Advisers, Credit Rating Agencies, Asset Management Companies and Fund Managers (i.e. Fund Managers of a mutual fund or alternative investment fund or venture capital fund or portfolio manager) are not required to be registered under RA Regulations. However, in case such intermediaries issue/circulate/distribute research reports to public or general investors and/or if they or their directors or employees make public appearance, they shall be required to comply with Chapter III of the RA Regulations. 11. Whether proxy advisers are required to obtain registration under RA Regulations? Yes. Proxy Advisers are required to obtain registration from SEBI under RA Regulations. 12. What are the requirements to be fulfilled by proxy adviser? All the provisions of Chapter II, III, IV, V and VI of RA Regulations shall apply mutatis mutandis to the proxy adviser. The proxy adviser shall be required to additionally disclose the following: i. the extent of research involve....
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....ments are as under: No. of clients Deposit Up to 150 clients Rs. 1 lakh 151 to 300 clients Rs. 2 lakhs 301 to 1,000 clients Rs. 5 lakhs 1,001 and above clients Rs. 10 lakhs 16. Can a sole proprietor make an application to get registered as a research analyst? A sole proprietor can make an application to get registered as an independent research analyst. The proprietor of the sole proprietorship firm is required to fulfil eligibility conditions applicable to individual under RA Regulations. 17. Who is an independent research analyst? "Independent research analyst" means a person whose only business activity is research analysis or preparation and/or publication of research report. It includes individuals engaged in providing research services without being employed with any research entity(intermediary) and entities other than SEBI registered intermediaries who are engaged in research activities. 18. What is covered under 'public media'? Public media means any media source available to the general public and includes a radio, television, internet, web or print media. 19. What are the disclosures required for making recommendati....
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....ect of securities listed or proposed to be listed on a stock exchange in India. However, before issuance of such research report or research analysis, such person is required to enter into an agreement with a research analyst or research entity registered under the RA regulations. 22. Is it mandatory for research analysts to include the words 'research analyst' in their name? Research analysts registered under the RA regulations shall use the term "research analyst‟ in all their correspondences with clients. Part-time research analyst registered under the RA regulations shall use the term 'part-time research analyst' in all correspondences with clients. 23. In case of a partnership firm, who is required to fulfil qualification and certification requirement under regulation 7 of RA Regulations? The partner/s engaged in research services shall be required to fulfil qualification and certification requirement under regulation 7 of RA Regulations. 24. How long does the certificate of registration remain valid under RA Regulations? The certificate of registration under RA Regulations remains valid till it is suspended or cancel....
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.... SEBI. 28. Whether the existing compliance officer of a Brokerage Firm/Merchant Banking Firm, etc. can act as a compliance officer of research entity under RA regulations? Yes. The existing compliance officer of intermediary can be appointed as a compliance officer of a research entity under RA Regulations. 29. Whether the research services provided by intermediaries such as brokers or merchant bankers (research entities) as value added services to their clients are considered as research services 'for consideration' for the purpose of RA Regulations? In case of intermediaries such as brokers or merchant bankers who provide research services as value added services to their clients, the brokerage/merchant banking charges/ tariff consideration include the consideration for the research services though it may not be separately identified/attributed to the research services. Thus, research services provided to these clients are considered as research services 'for consideration' under RA Regulations even though no separate fee for research services is received by these intermediaries directly from the clients. 30. Whether brokerage services or merch....
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..../group level. ii. The RA/research entity is required to maintain client level segregation at family/group level in case it is engaged in providing research services on mutual funds and is also engaged in distribution of mutual funds. iii. RA/research entity may carry out distribution of other products (such as banking products) not under purview of SEBI to their clients at family/group level. Any grievances related to such products shall not come under purview of SEBI. Note: For the purpose of abundant clarity, it may be noted that these provisions/clarifications do not restrict distributor of mutual funds from providing any investment advice to its clients incidental to its primary activity as mentioned under regulation 4(d) of SEBI (Investment Adviser) Regulations, 2013. 32. Is NISM certification mandatory for the sales staff, support staff, customer support team or other client-facing staff not involved in research? As per the explanation to regulation 2(ne) of the RA regulations, all client and public facing persons such as analysts, sales staff, service relationship managers, client relationship managers, etc., by whatever name called, shall be deemed to be persons asso....
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....ving research services as a value added service along with other services availed from the research entity or any other entity at family/group level on payable basis. For the purpose of abundant clarity, it is to be stated that call recording is not required if the interaction with client is made through means such as email, etc. for which digital footprint is available. The purpose of the records of the client interaction is to document the interaction to cater to potential client grievances related to research services provided by the research analyst/ research entity. Access to an effective grievance redressal mechanism is a basic right of every investor irrespective of the nature of the investors i.e. individual/ HUF/ institutions etc. Hence, RAs/research entities shall ensure compliance with the provision for maintenance of records of interactions even in case of their clients who are institutional investors or QIBs. 34. Whether non-fee paying clients are considered 'clients' of research entity? Whether number of such non-fee paying clients shall be considered as clients for the purpose of periodic reporting and determining the deposit amount to be lien marked to RAASB? Wh....