SEBI seeks to regulate research analysts

SEBI feels that the research reports prepared by analysts as such might not be violating any rules, but they might be used by vested interests for stock market manipulations

"Advice from investment analysts is many times prone to conflicts of interest that may prevent them from offering independent and unbiased opinions. Since the prime objective is to protect investors and enhance confidence in the market, it is a major concern of regulatory authorities to identify and deal with conflicts of interest arising from the production and dissemination of research reports," said the market regulator Securities and Exchange Board of India (SEBI) in a consultation paper on the regulation of research analysts it has put out for discussion and for public comments. Any market participant or interested party can send their comments to SEBI before 21 December 2013.


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 and research reports.


In a board meeting in 2011, SEBI had discussed the need to have a comprehensive set of regulations for research analysts.


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 comments / suggestions on this paper may be emailed to T Venkateshwarlu, Assistant General Manager ([email protected]) or may be sent to the following address, latest by 21 December 2013 in the following format:


Sr. No. 


Pertains to which regulation/sub-regulation

















Letter(s) can be addressed to:


Ms. Barnali Mukherjee

General Manager,

Investment Management Department - Division of Funds- 1,

Securities and Exchange Board of India,

SEBI Bhavan, Plot No. C4-A, "G" Block,

Bandra Kurla Complex, Bandra (East),

Mumbai 400 051 (India)


Here is the consultation paper released by SEBI



Prakasam S

4 years ago

The regulations are heavily loaded against small, independent analysts. It is wrong to presume that every single independent analyst is acting with vested interests.

The underlying principle in any investment decision should be "let the buyer beware". Just because analyst XYZ says "buy stock ABC", should investors blindly follow the advice, without doing their own bit of research? Stocks can also move down after a buy recommendation, due to factors which cannot be predicted even with reasonable acumen and expertise, such as management issues, or frauds being uncovered, or regulatory changes, etc. Should the analyst be held accountable for such cases too?

Sebi seeks to even control what the "analyst" says in the media! Again, the presumption is that the analyst is trying to "push" certain stocks with a vested interest. I believe such constraints should only apply to small cap stocks with low volumes, with say market cap less than Rs100 crore, and penny stocks. If an analyst voices his views on index stocks, or large-cap stocks with good liquidity, his intentions simply cannot be suspected, since a single analyst can never cause the price of such stocks to go up or down dramatically.

Research reports do not usually sell for cash. Why should an analyst, who is not selling his research for cash, have to pay the hefty registration and enrollment fees of Rs 1.50 lakh, when his income from selling research is next to zero?


4 years ago

Investing is a craft, why insist on treating it like a science?

If the objective is to protect investors, then would it not be better to regulate investor behavior in the first place.

Western Railways says it has no money for gap reduction work

Western Railway is wasting money on unnecessary purchases while claiming insufficient funds for reducing the gap between platform and trains that endangers the lives of commuters

The Western Railway has stopped gap reduction work because it is low on allocated funds. On the other hand, it wants to renovate the Churchgate station and seek a fare hike unmindful of wasting money. Railway activist Samir Zaveri has submitted a complaint, on 27th November, to the monitoring committee of Bombay High Court, regarding platform gap reduction work which has been stopped by Western Railway.

In his letter to the Bombay High Court, he said, “At any cost gap reduction work should be carried out quickly without any delay because daily passengers are falling into platform gap and getting injured, killed or left with permanent disability.”

“Huge public money has been fruitlessly wasted by Western Railway officials, and on the other hand, the essential work to reduce platform gap has been stopped by giving reasons that no further funds are allotted for the purpose,” Zaveri added.

He also requested the High Court to ask WR to disclose details of railway officers who are responsible for this delay to take action against them.

Both the Western Railway and Central Railway earlier this year had started working on defective areas and increased platform’s height to reduce gap between platform and train. However, Western Railway started the work in January 2013 after it was issued a show cause notice by Bombay High Court’s order on the basis of Samir Zaveri’s earlier complaint pointing out the lack of steps taken by Western Railway officials to increase safety of railway passengers.

Earlier in 2004, the Bombay High Court wrote in a separate order: “Platform height should be raised. Whenever necessary, gap between the footboard of the train and platform edge should be checked on the entrance while entering in the Station”.

Many passengers travel daily through ‘Mumbai’s lifeline-local trains’. The ‘lifeline’ should be ‘safe’ but the fact is, many passengers are getting hurt, dying or are left with permanent disability by falling into the gap between the train and the platform. Samir Zaveri has set up a Railway Helpline with Moneylife Foundation to assist victims.


Sensex, Nifty may give up some gains: Friday closing report

Nifty may open higher on Monday but may start giving up some gains either later in the day or Tuesday.

Yesterday, we suggested that the market was in the grip of a strong short-term rally and may continue to move. It recorded strong gains to end the week on a good note. There was hardly any fight from the bears, as the bulls took over and kept the market steady and strong throughout the trading session. This is the 2nd straight day that saw little fight from the bears. All the eyes are on the GDP data.


The BSE Sensex opened at 20,558 and stayed steady and strong throughout the session. It touched the intra-day high of 20,819 before closing at 20,791(up 257 points or 1.25%). Similarly, Nifty opened at 6,103, hit an intra-day high of 6,182 before closing at 6,176 (up 84 points, or 1.38%).


The indices moved up on slightly lower volumes of 51.68 lakh shares.


All the indices finished in the green, with Bank Nifty. CNX MNC and CNX Finance finishing strong.


Of the 50 stocks on the Nifty, 42 advanced and 8 declined. The top gainers were JP Associates (9.20%); NMDC (6.67%); Bank of Baroda (5.17%); Sesa Sterlite (4.57%) and BHEL (3.78%). The top losers were M&M (-1.34%); Hero MotoCorp (-0.69%); Wipro (-0.54%); NTPC (-0.27); Asian Paints (-0.18).


Of the 1,461 shares on the NSE, 895 closed in the positive, 472 closed in the negative while 94 remained unchanged.


Finance minister P Chidambaram, said during the Indian Economic Times Conclave said that there were no quick fixes for inflation as it would take some time for it to cool down. According to Reuters, Indian traders were hoping that the Reserve Bank of India (RBI) would roll back cash constraints measures that were taken to contain the rupee free fall. According to Reuters, cash flow in the banking system has improved with the overnight call rate dropping to the repo rate of 7.75% from the emergency marginal standing facility rate which stands at 8.75%.


Asian markets were trading flat amidst Thai protests which are gathering momentum. The latest news is that Thai protesters have broken into the army compound. Strangely, the Thai benchmark index, SET, was up five points. Nikkei was seen trending down by 0.41% while Singapore Strait Times was down 0.36%. Hang Seng was marginally up 0.36%.


The Euro region saw two ratings assessments; Spain outlook was raised to ‘stable’ from ‘negative’ by S&P, with ratings at BBB-. On the other hand, Netherlands rating was cut from AAA to AA+, though the outlook remains ‘stable’. Most of the markets were trending


Yesterday, the United States stock markets were closed. Many investors in US are now awaiting key jobs data which will be released in a few days. This may give further hints of tapering. US stock futures were seen trending up.


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