MUMBAI: Stock market research analysts have suddenly become reluctant to share their views on stocks and stock markets after the new research analyst regulation notified by the Securities and Exchange Board of India (SEBI) came into effect from December 1, 2014. What has even scared them further were strong rumours about a research analyst based out of Indore being penalised by the capital market regulator for violation of the new norms.
The new regulation seeks to address the potential conflict of interest by regulating analysts and research firms through compulsory registration and stricter disclosure norms. “There is a lot of confusion among the analyst fraternity about the activities that are regulated by the new norms and the activities that are not regulated,” said Arun Kejriwal, director, Kejriwal Research and Invest-ment Service (KRIS). However, he added that the new regulation would help improve the quality of research reports in the long term.
“There is a long disclosure requirement both at the entity and individual levels, which are time consuming. Additio-nally, the research firms and analysts are prohibited from dealing in the securities 30 days before or five days after the publication of the research report. I don’t know whe-ther my firm had dealt in any particular securities during the last one mon-th. It’s little difficult to monitor and keep a track of it,” said a head of equity at a domestic brokerage firm when asked about his views on OFS.
A head of a domestic research firm who did not want to be quoted said that the registration charges levied by the regulator are exorbitant. While corporate bodies are required to pay Rs 5 lakh as registration charges, individuals, partnership firms and proxy advisors have to pay Rs10,000 each.
