Among the proposed measures, independent research analysts could be asked to make extensive disclosures regarding their incentive structure, shareholding pattern, market dealings, and various direct and indirect business interests
New Delhi: Fearing share price manipulation with the help of certain ‘independent’ research reports on Indian companies, market watchdog Securities and Exchange Board of India (SEBI) may soon bring all kinds of research analysts under its regulatory ambit, reports PTI.
The research analysts attached with brokerage firms, fund houses, investment banks and other market intermediaries are currently governed by SEBI regulations, but there are no comprehensive rules that could also cover third-party or independent analysts.
In a board meeting late last year, SEBI had discussed the need to have a comprehensive set of regulations for research analysts. The regulator is now working towards brining greater accountability in the conduct of independent analysts as well, a senior official said.
SEBI would also look at creating greater awareness among investors, and public in general, about doing their own due diligence before taking any decision based on these reports.
A major area of concern in regulating independent analysts is the fact that it could amount to putting curbs on expression of opinion, the official said.
It has also been felt that the research reports as such might not be violating any rules, but they might be used by vested interests for stock market manipulations.
The official said that SEBI as such looks into the issued raised by these reports about the Indian companies, but it has also come across certain instances where bear cartels have used the negative issues raised in these reports to beat down the share prices.
At the same time, positive reports have been used to push the prices higher as well, he added. While he refused to name any particular research firm, saying it could hinder its oversight mechanism, reports from one particular overseas research firm has raised serious concerns about a few Indian groups in the recent months.
However, research on its own cannot generate sufficient revenue to sustain its existence; therefore, it has to rely on other parts of the organisation. This could lead to conflict of interest in their functions, he added.
Among the proposed measures, the analysts could be asked to make extensive disclosures regarding their incentive structure, shareholding pattern, market dealings, and various direct and indirect business interests.
Various registered market intermediaries are already required to put in place certain ‘Chinese Walls’ to avoid any conflict of interest arising out of the reports published by their equity research units.
The new rules could also prescribe mechanisms to ensure that the research analysts’ trading activities or financial interests do not prejudice their reports.
The BSE SME Exchange, which will function like the AIM of the London bourse, the TSXV of Canada, the GEM of Hong Kong, the Mothers of Japan, the Kosdaq of Korea and the Nasdaq, has been developed after studying the salient features, best practices and the business model of these existing exchanges
Mumbai: The much-awaited Small and Medium Enterprises (SME) Exchange, promoted by the Bombay Stock Exchange (BSE), is set to begin operations from 13th March, reports PTI.
The SME platform from the country’s oldest exchange will be inaugurated next Tuesday, an exchange statement said here.
Small corporates will be able to raise capital from the primary markets by way of an initial public offering (IPO) or private placements and later through rights issues. An IPO can be made through the fixed price method, book building method or a combination of both.
The markets regulator Securities and Exchange Board of India (SEBI) had, last September, granted permission to the BSE to launch SME Exchange that will offer a platform to small and medium companies to raise funds.
The SME Exchange, which will function like the AIM of the London bourse, the TSXV of Canada, the GEM of Hong Kong, the Mothers of Japan, the Kosdaq of Korea and the Nasdaq, has been developed after studying the salient features, best practices and the business model of these existing exchanges, according to the BSE.
The market leader NSE and the privately-promoted MCX Exchange are also in the process of launching the same platform for small and medium scale enterprises.
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