Guidelines for Research Analysts
Summary
SEBI has notified amendments to the Research Analysts Regulations effective December 16, 2024, requiring compliance with updated qualification and certification standards. The circular outlines specific deposit requirements for research analysts based on client numbers and mandates a transition period for existing entities to meet these financial obligations. It further clarifies eligibility criteria for dual registration as Investment Advisers and Research Analysts, as well as definitions and conditions for part-time Research Analysts. Existing partnership firms lacking qualified partners must restructure as LLPs or body corporates by September 30, 2025. Non-individual research analysts may appoint independent professionals as Compliance Officers who hold specific NISM certifications. Research analysts using AI tools are solely responsible for data security and must disclose AI usage to clients. This part details specific operational guidelines for Research Analysts, including definitions of dependent family members and segregation requirements. It establishes mandatory procedures for model portfolio recommendations, client consent on terms and conditions, and KYC record maintenan
Text
SEBI has reviewed the framework for regulation of Research Analysts (RAs) and has notified Securities and Exchange Board of India (Research Analysts) (Third Amendment) Regulations, 2024 which came into force on December 16, 2024.
The Research Analysts shall ensure compliance with the aforesaid amendments to RA Regulations and the following guidelines specified under the amended SEBI (Research Analysts) Regulations, 2014.
It is clarified that the revised qualification requirements shall not be required to existing individual RAs, Principal officer of non-individual RAs or research entity, individuals employed as research analysts and partners of research analyst, if any, engaged in providing research services. However, they shall hold NISM certifications and comply with other conditions specified under Regulation 7(3) of the RA Regulations.
A research analyst shall maintain a deposit of such sum, as specified by the SEBI from time to time. The deposit requirements shall be based on the maximum number of clients of RA on any day of the previous financial year: Up to 150 clients ₹ 1 lakh; 151 to 300 clients ₹ 2 lakh; 301 to 1,000 clients ₹ 5 lakhs; 1,001 and above clients ₹ 10 lakhs.
The deposit shall be maintained with a scheduled bank marked as lien in favor of Research Analyst Administration and Supervisory body (RAASB), in the manner and form as may be specified by RAASB.
The deposit amount may be revised for any change in applicable amount of deposit, based on the maximum number of clients in the previous financial year, latest by 30th April of the subsequent financial year.
The deposit requirements shall be reviewed by SEBI from time to time.
The existing RAs shall ensure compliance with the deposit requirement latest by April 30, 2025. For the new applicants seeking registration as RA, the deposit requirement shall become effective immediately from the date of this circular.
In terms of the proviso to Regulation 9 of the RA Regulations, an individual or partnership firm registered as an investment adviser may be granted certificate of registration as a research analyst, subject to such terms and conditions as the SEBI may deem fit and appropriate.
An investment adviser, who is an individual or partnership firm, registered under the SEBI (Investment Advisers) Regulations, 2013 (IA Regulations), may be considered eligible for grant of certificate of registration as RA under the RA Regulations provided that it shall comply with the rules/regulations/reporting requirements under each of these regulations viz. IA Regulations and RA Regulations separately.
Such IA/RA shall provide an undertaking stating that it shall maintain arms-length relationship between its activity as IA and RA and shall ensure that its investment advisory services and research services are clearly segregated from each other.
A part-time RA is an individual or partnership firm who is also engaged in any other business activity/employment which is unrelated to securities and does not involve handling/ managing of money/ funds of client/ person or providing advice/ recommendation to any client/person in respect of any products/ assets for investment purposes.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Guidelines for Research Analysts. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.