Mumbai: Stock broking firms and market participants are in a quandary over the recent decision by the Securities and Exchange Board of India (Sebi) to regulate research analysts. The capital market regulator had last week approved the Sebi (research analyst) regulations, 2014 that has created a lot of ambiguity.
While Sebi had issued just a press statement without the complete guidelines, market participants said they are confused regarding the kind of individuals and entities that should seek prior registration with the regulator. They are also concerned whether the final guidelines would have provisions putting a cap on the remuneration or incentives paid to research analysts.
According to SEBI, the regulations seek to register and regulate individual research analysts and entities engaged in issuance of research reports, research analysis or publication of substance of research report or who provide research report or make ‘buy/sell/hold’ recommendations on securities or who make recommendations on public offers.
Arun Kejriwal, director, KRIS, said that he does not provide investment advisory services or broking services, but runs a website on initial public offering, which does not charge any fees from those who access it. “So I don’t really know whether I should get myself registered with Sebi or not,” he said.
Another head of research at a domestic broking firm, who did not wish to be named, said that since the broking house is already registered and regulated by SEBI, it is not clear whether the broking firm or the analysts issuing the rese-arch reports should get registered with Sebi. Sebi in its consultation paper last year noted that investors often view analysts as experts and important sources of information about the securities they review and often rely on their advice.
