CIRCULAR
SEBI/HO/MIRSD/ MIRSD-PoD/P/CIR/2025/105 July 23, 2025
To,
All registered Research Analysts
BSE Ltd. (Research Analyst Administration and Supervisory Body- RAASB)
Sir / Madam,
Sub: Frequently Asked Questions (FAQs) related to regulatory provisions for
Research Analysts
1. Securities and Exchange Board of India (SEBI) has notified SEBI (Research
Analysts) (Third Amendment) Regulations, 2024 on December 16, 2024. Pursuant
to these amendments, SEBI has issued a circular dated January 08, 2025 on
guidelines for research analysts.
2. SEBI is in receipt of representations from Research Analysts (RAs) requesting to
provide clarifications on certain regulatory provisions.
3. In this regard, in order to provide clarity and guidance for compliance by RAs with
the regulatory provisions, the details/clarifications are provided as part of the
Frequently Asked Questions (FAQs) at Annexure A. These FAQs are issued after
public consultation and incorporating various suggestions received during such
consultation (wherever found appropriate). For full particulars of laws governing
the Research Analysts (RAs), please refer to the Acts/ Regulations/ Guidelines/
Circulars, etc. appearing under the Legal Framework Section of SEBI website. For
an interpretation of a specific provision of the Regulations, informal guidance may
be sought as specified under SEBI (Informal Guidance) Scheme 2003.
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4. Based on the representations received from RAs/research entities and to ensure
ease of compliance, it has been decided that RAs/research entities shall now
ensure the compliance with the following-
i. Persons associated with research services shall obtain the relevant certification
from NISM as specified by SEBI within one year from the date of this circular.
ii. Consent by signature on the terms and conditions including most important
terms and conditions (MITC) shall not be mandatory for the clients who are
institutional investors or qualified institutional buyers. However, RAs/research
entities are required to disclose the terms and conditions of research services
including MITC to these clients.
5. This circular is issued in exercise of powers conferred under section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 33 of
Securities and Exchange Board of India (Research Analysts) Regulations, 2014 to
protect the interests of investors in securities market and to promote the
development of, and to regulate the securities market.
6. This circular is available on the SEBI website at www.sebi.gov.in under the
category "Legal Circulars".
Yours faithfully,
Aradhana Verma
General Manager
Tel. No. 022-26449633
aradhanad@sebi.gov.in
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Annexure A
FREQUENTLY ASKED QUESTIONS (FAQs)
1. How are research analysts regulated in India?
The SEBI (Research Analysts) Regulations, 2014 (“RA Regulations”) came into
effect from December 01, 2014. The RA Regulations specify conditions for
registration, certification, limitations on trading by research analysts, limitations
on compensations of research analyst, various disclosures to be made during
public appearance and during making recommendations through public media,
code of conduct, records to be maintained, manner of conducting inspection,
etc. The RA Regulations (as amended from time to time) are available on the
SEBI website www.sebi.gov.in.
2. Whether the individuals employed as research analyst with a research
entity are required to obtain registration certificate under RA
Regulations?
No. Individuals employed as research analyst with a research entity are not
required to obtain registration certificate from SEBI. The research entity, which
employs individuals as research analysts, is required to obtain registration
certificate under the RA Regulations. The individuals employed as research
analyst by research entity are required to comply with qualification and
certification requirements as specified in the regulations. The trading limitations
prescribed under the regulations are applicable to them.
3. Whether the personnel involved in publication activities like marketing
and editing are covered under the definition of Research Analyst under
RA Regulations?
The personnel engaged in clerical activities/marketing activities, back office
assistance, support services, etc., in relation to publication and/or distribution
of research report are not covered under the definition of research analysts.
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These personnel are also not considered as persons associated with research
services if –
(i) these personnel while performing these activities do not have client
contact, or
(ii) these activities have no connection with the research services provided
as a RA.
4. What are the communications excluded from the definition of research
report?
"Research report” does not include the following communications: -
i. comments on general trends in the securities market;
ii. discussions on the broad-based indices;
iii. commentaries on economic, political or market conditions;
iv. periodic reports or other communications prepared for unit holders of
Mutual Fund or Alternative Investment Fund or clients of Portfolio
Managers and Investment Advisers;
v. internal communications that are not given to current or prospective
clients;
vi. communications that constitute offer documents or prospectus that are
circulated as per regulations made by SEBI;
vii. statistical summaries of financial data of the companies;
viii. technical analyses relating to the demand and supply in a sector or the
index;
ix. any other communication which SEBI may specify from time to time.
5. Whether technical analysis as a methodology is exempted from the
purview of the RA Regulations?
Research services provided under RA Regulations are specific to the securities
under purview of SEBI and are agnostic to the methodology used to provide
research services. Providing research services (including buy/sell/hold
recommendation) on a security or securities based on any methodology
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(including the technical analysis) is not exempted from the purview of the RA
Regulations. However, technical analyses relating to the demand and supply
for a particular sector or index is exempted from the purview of RA Regulations.
6. What are the communications excluded under periodic reports referred
to in answer to FAQ No. 4 above?
Periodic reports such as sending financial account statements, annual reports
and any other communication as required under the specific regulations
prepared for unit holders of Mutual Fund or Alternative Investment Fund or
clients of Portfolio Managers and Investment Advisers are excluded from the
definition of research report under RA Regulations.
7. Does RA Regulations cover only equity and equity linked securities?
No. RA Regulations cover all securities as defined under clause (h) of section
2 of the Securities Contracts (Regulation) Act, 1956.
8. Who is required to make an application to get registration under RA
Regulations?
No person shall act as a research analyst or research entity or hold itself out as
a research analyst unless he has obtained a certificate of registration from SEBI
on and from the commencement of RA Regulations unless an exemption
specifically applies to such a person.
An applicant who intends to engage in providing research services such as
issuance of research report or research analysis is required to make an
application for registration under RA Regulations.
9. Which intermediaries are covered under the definition of ‘Research Entity’
who are mandated to obtain registration under RA Regulations?
SEBI registered Stock Brokers, Merchant Bankers and other intermediaries
except those who are exempted from making application for registration under
RA Regulations are required to make application for grant of registration under
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RA Regulations, if they are engaged in issuance of research reports or research
analyses. Such intermediaries are covered under the definition of ‘research
entity’.
10. Who are exempted from making application for grant of registration under
RA Regulations?
Investment Advisers, Credit Rating Agencies, Asset Management Companies
and Fund Managers (i.e. Fund Managers of a mutual fund or alternative
investment fund or venture capital fund or portfolio manager) are not required
to be registered under RA Regulations.
However, in case such intermediaries issue/circulate/distribute research reports
to public or general investors and/or if they or their directors or employees make
public appearance, they shall be required to comply with Chapter III of the RA
Regulations.
11. Whether proxy advisers are required to obtain registration under RA
Regulations?
Yes. Proxy Advisers are required to obtain registration from SEBI under RA
Regulations.
12. What are the requirements to be fulfilled by proxy adviser?
All the provisions of Chapter II, III, IV, V and VI of RA Regulations shall apply
mutatis mutandis to the proxy adviser.
The proxy adviser shall be required to additionally disclose the following:
i. the extent of research involved in a particular recommendation and the
extent and/or effectiveness of its controls and procedures in ensuring the
accuracy of issuer data;
ii. policies and procedures for interacting with issuers, informing issuers
about the recommendation and review of recommendations.
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Proxy adviser is required to maintain the record of his voting recommendations
and furnish the same to SEBI on request.
13. What is the procedure of obtaining registration as a research analyst from
SEBI?
Application is required to be made in Form A as specified in the RA Regulations
with necessary supporting documents to the Research Analyst Administration
and Supervisory Body (RAASB). Application can be submitted to RAASB at
https://membershipraia.bseindia.com/
RAASB shall, after scrutiny of the application, recommend the application to
SEBI for grant of registration as RA.
A section by the name "Research Analyst" has been created on the SEBI
website where the details/circulars/press releases pertaining to RA regulations
are being uploaded on a periodic basis.
14. Whether any application fee is required to be paid at the time of making
application for grant of registration under RA Regulations and what is the
amount to be paid for grant of registration/continuation of registration as
research analyst?
Yes. Application fees must be paid along with application form for grant of
registration. The details of the applicable fees to be paid to SEBI are as below:
S. Category Application Registration Renewal Fee
No. Fee Fee (for the (for
first five years subsequent
of registration) five years)
1 Individual and Rs. 2,000 Rs. 3,000 Rs. 1,000
Partnership Firms
2 Proxy Advisers Rs. 2,000 Rs. 3,000 Rs. 1,000
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3 Body Corporate Rs. 20,000 Rs.30,000 Rs. 5,000
including Limited
Liability Partnership
Further, the RAs are required to be enlisted with the RAASB and to pay
administrative fees as specified by RAASB.
15. What is the capital adequacy requirement for a Research Analyst?
There is no capital adequacy requirement applicable to an RA. However, an RA
is required to maintain a deposit with RAASB in accordance with their number
of clients in the manner specified by SEBI. The applicable deposit requirements
are as under:
No. of clients Deposit
Up to 150 clients ₹ 1 lakh
151 to 300 clients ₹ 2 lakhs
301 to 1,000 clients ₹ 5 lakhs
1,001 and above clients ₹ 10 lakhs
16. Can a sole proprietor make an application to get registered as a research
analyst?
A sole proprietor can make an application to get registered as an independent
research analyst. The proprietor of the sole proprietorship firm is required to
fulfil eligibility conditions applicable to individual under RA Regulations.
17. Who is an independent research analyst?
"Independent research analyst" means a person whose only business activity
is research analysis or preparation and/or publication of research report. It
includes individuals engaged in providing research services without being
employed with any research entity(intermediary) and entities other than SEBI
registered intermediaries who are engaged in research activities.
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18. What is covered under ‘public media’?
Public media means any media source available to the general public and
includes a radio, television, internet, web or print media.
19. What are the disclosures required for making recommendations in public
media?
Regulation 21(1) of RA Regulations applies to research analyst or research
entity including its directors and employees. They are required to disclose their
registration status and details of financial interest in the subject company during
public appearance.
Under regulation 21(2) of RA Regulations, whenever any person including a
director or employee of an investment adviser or credit rating agency or asset
management company or fund manager, makes a public appearance or makes
a recommendation or offers an opinion concerning securities or public offers
through public media, all the provisions of regulation 16 on limitations on trading
and regulation 17 on limitations on compensation apply mutatis mutandis to him
and he is required to disclose his name, registration status and details of
financial interest in the subject company at the time of:
(i) making such recommendation or offering such opinion in personal
capacity;
(ii) responding to queries from audiences or journalists in personal
capacity;
(iii) communicating the research report or substance of the research
report through the public media.
20. Whether journalists who are on the payrolls of media organizations such
as newspaper or television are required to get registered with SEBI?
No. The journalists who are on the payrolls of media agency such as newspaper
or television are not required to get registered with SEBI. However, if they make
recommendations or offer an opinion concerning securities or public offers
through public media, such recommendations/opinions shall be based on the
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research reports of SEBI registered research analyst or any other SEBI
registered intermediary permitted by SEBI to issue research report. Further, all
the provisions of regulations 16 on limitations on trading shall apply mutatis
mutandis on such journalists and they shall disclose the name and details of
financial interest in the subject company. They shall also disclose the name of
RA/intermediary, its registration status and details of financial interest, if any, of
such RA/intermediary in the subject company.
21. Whether a person located outside India can issue research reports under
RA Regulations?
Yes. A person located outside India can issue research report or research
analysis in respect of securities listed or proposed to be listed on a stock
exchange in India. However, before issuance of such research report or
research analysis, such person is required to enter into an agreement with a
research analyst or research entity registered under the RA regulations.
22. Is it mandatory for research analysts to include the words ‘research
analyst’ in their name?
Research analysts registered under the RA regulations shall use the term
"research analyst‟ in all their correspondences with clients. Part-time research
analyst registered under the RA regulations shall use the term ‘part-time
research analyst’ in all correspondences with clients.
23. In case of a partnership firm, who is required to fulfil qualification and
certification requirement under regulation 7 of RA Regulations?
The partner/s engaged in research services shall be required to fulfil
qualification and certification requirement under regulation 7 of RA Regulations.
24. How long does the certificate of registration remain valid under RA
Regulations?
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The certificate of registration under RA Regulations remains valid till it is
suspended or cancelled. There is no requirement of renewal. However, the
validity of the registration shall be subject to payment of applicable fees every
five years.
25. Who are all required to monitor the personal trading activities of the
individuals employed as research analysts?
Research analysts/Research entities who employ individuals as research
analysts are required to monitor and record the personal trading activities of the
individuals employed as research analyst with them.
26. What are trading restrictions imposed under regulation 16 of RA
Regulations?
Independent research analysts, part-time research analysts, individuals
employed as research analyst or their associates shall not deal or trade any
securities that the research analyst recommends or follows within 30 days
before and 5 days after the publication of a research report on the subject
company.
Independent research analysts, part-time research analysts, individuals
employed as research analyst or their associates shall not deal or trade directly
or indirectly in securities that he reviews in a manner contrary to his given
recommendation.
Independent research analysts, part-time research analysts, individuals
employed as research analyst or their associates shall not purchase or receive
securities of the issuer before the issuer's initial public offering, if the issuer is
principally engaged in the same types of business as companies that the
research analyst follows or recommends.
The aforesaid trading restrictions under regulation 16 of RA Regulations are
also applicable in respect of research entities where the entity has not
segregated its research activities from all other activities and maintained an
arms-length relationship between such activities.
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27. Who are required to appoint a compliance officer under RA Regulations?
A non-individual research analyst or research entity is required to appoint a
compliance officer who shall be responsible for monitoring the compliance in
respect of the requirements of the Act, RA regulations and circulars issued by
SEBI. A non-individual research analyst may appoint an independent
professional who is a member of ICAI or ICSI or ICMAI or member of any other
professional body as may be specified by the SEBI, provided such a
professional holds a relevant certification from NISM, as may be specified by
the SEBI.
28. Whether the existing compliance officer of a Brokerage Firm/Merchant
Banking Firm, etc. can act as a compliance officer of research entity under
RA regulations?
Yes. The existing compliance officer of intermediary can be appointed as a
compliance officer of a research entity under RA Regulations.
29. Whether the research services provided by intermediaries such as
brokers or merchant bankers (research entities) as value added services
to their clients are considered as research services ‘for consideration’ for
the purpose of RA Regulations?
In case of intermediaries such as brokers or merchant bankers who provide
research services as value added services to their clients, the
brokerage/merchant banking charges/ tariff consideration include the
consideration for the research services though it may not be separately
identified/attributed to the research services.
Thus, research services provided to these clients are considered as research
services ‘for consideration’ under RA Regulations even though no separate fee
for research services is received by these intermediaries directly from the
clients.
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30. Whether brokerage services or merchant banking services provided by
research entity are considered as distribution activity?
No. Brokerage services or merchant banking services provided by research
entity are not considered as distribution activity for the purpose of regulation
26C of RA Regulations.
31. Whether RAs/research entity can provide distribution services on the
products/securities on which they are not providing research
services/brokerage/merchant banking services to their clients?
Is client level segregation (i.e. at group level, same client cannot be
provided both research as well as distribution service) required if
distribution and research services are provided on different categories of
securities?
An RA is expected to provide independent, unbiased, and objective research
on securities. It is important to ensure that there is no conflict of interest
between the research activity and other activities of the RA. Purpose of the
regulation 26C of RA Regulations is to address the inherent concerns on
potential conflict of interest of RA when it provides both the research and
distribution services to their client that may not be in the interest of client. Thus
in terms of the regulatory intent, RA/research entity cannot provide research
services for the securities/products in case it also provides distribution services
for such securities/products.
Thus, in alignment with the intent of the regulation, in exercise of power under
regulation 33 of RA Regulations, it is clarified that RA/research entity can
provide distribution services on products/securities provided they are not
providing research services on such products/securities being distributed and
are providing such distribution services through separately identifiable
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department or division or business unit within the same entity or through a
separate entity on an arms’ length basis.
Some clarifications with illustrations are given below:
i. Client level segregation of research and distribution services is not required
if RA/research entity distributes mutual funds/PMS schemes/AIF products
but provides research services only on individual stocks and is not providing
research services on mutual funds/PMS schemes/AIF products. e.g. If a RA
distributes 'Mutual Fund Scheme A' at family or group level, it cannot
provide research services on 'Mutual Fund Scheme A' and vice versa at
family/group level.
ii. The RA/research entity is required to maintain client level segregation at
family/group level in case it is engaged in providing research services on
mutual funds and is also engaged in distribution of mutual funds.
iii. RA/research entity may carry out distribution of other products (such as
banking products) not under purview of SEBI to their clients at family/group
level. Any grievances related to such products shall not come under
purview of SEBI.
Note: For the purpose of abundant clarity, it may be noted that these
provisions/clarifications do not restrict distributor of mutual funds from providing
any investment advice to its clients incidental to its primary activity as
mentioned under regulation 4(d) of SEBI (Investment Adviser) Regulations,
2013.
32. Is NISM certification mandatory for the sales staff, support staff, customer
support team or other client-facing staff not involved in research?
As per the explanation to regulation 2(ne) of the RA regulations, all client and
public facing persons such as analysts, sales staff, service relationship
managers, client relationship managers, etc., by whatever name called, shall
be deemed to be persons associated with research services, but shall not
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include persons who discharge clerical or office administrative functions if
where there is no connection with research services and they have no client
contact.
Ii is clarified that the aforesaid personnel are not considered as persons
associated with research services if –
(i) these personnel while performing activities/services do not have client
contact, or
(ii) these activities/services have no connection with the research services
provided as a RA.
It shall not be mandatory for such persons to obtain the NISM certification.
Persons associated with research services shall obtain the relevant certification
from NISM as specified by SEBI within one year from the date of this circular or
within the timeline as may be specified by SEBI.
33. Whether the following compliance requirements are also applicable in
case of non-fee paying clients including institutional investors? -
i. Disclosure of terms and conditions of research services including
Most Important Terms and Conditions (MITC) and signing/taking
consent of client on these terms and conditions
ii. KYC Requirements
iii. Maintenance of records of interactions with clients such as call
recordings, emails, sms
i. MITC is primarily intended for investors who may not have necessary
resources to gather necessary information to take informed decision.
Institutional investors/Qualified institutional Buyers (QIBs) are sophisticated
investors who have necessary skills, knowledge and means to protect their
interests and take informed decisions. Hence, in exercise of power under
Regulation 33 and for ease of doing business, it is clarified that consent on
the terms and conditions including most important terms and conditions
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(MITC) of research services shall not be mandatory for the clients who are
institutional investors or QIBs. However, RAs/research entities are required
to disclose the terms and conditions of research services including MITC to
these clients.
ii. RAs/research entities are required to follow the KYC procedure for clients
paying fees directly for research services.
iii. The requirement of maintenance of records of interactions with clients such
as call recordings, emails, etc. is applicable for fee-paying as well as non-fee
paying clients whereas non-fee paying clients are the clients receiving
research services as a value added service along with other services availed
from the research entity or any other entity at family/group level on payable
basis. For the purpose of abundant clarity, it is to be stated that call recording
is not required if the interaction with client is made through means such as
email, etc. for which digital footprint is available.
The purpose of the records of the client interaction is to document the
interaction to cater to potential client grievances related to research services
provided by the research analyst/ research entity. Access to an effective
grievance redressal mechanism is a basic right of every investor irrespective
of the nature of the investors i.e. individual/ HUF/ institutions etc. Hence,
RAs/research entities shall ensure compliance with the provision for
maintenance of records of interactions even in case of their clients who are
institutional investors or QIBs.
34. Whether non-fee paying clients are considered ‘clients’ of research
entity?
Whether number of such non-fee paying clients shall be considered as
clients for the purpose of periodic reporting and determining the deposit
amount to be lien marked to RAASB?
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Whether research entity is required to disclose and take consent on the
terms and conditions for research services from these clients?
The term ‘consideration’ under RA regulation is defined as any form of
economic benefit including non-cash benefit, received or receivable, directly or
indirectly, in any form whether from client or otherwise for providing research
services.
Non-fee paying clients are the clients receiving research services as a value
added service along with other services availed from the research entity or any
other entity at family/group level on payable basis. This is also highlighted in
response to FAQ No. 29 above where ‘consideration’ is received indirectly by
research entity.
Thus, the number of clients of RA/research entity shall mean total of fee-paying
clients and non-fee paying clients of RA/research entity.
RA/research entity is required to report this number of clients (fee-paying and
non-fee paying clients) in periodic reporting format and shall also form basis for
determining the requisite deposit amount applicable to the RA/research entity.
The research entity is required to ensure the compliance with the requirement
of disclosure of terms and conditions of research services to all such clients
and to take their consent thereupon, except for clients who are institutional
investors/QIBs for whom mere disclosure shall suffice and there shall be no
requirement of seeking their consent to terms and conditions.
35. Whether the exemption to compliance with client level segregation of
research services and distribution activities is allowed to all entities
offering services to Institutional clients and not only to entities providing
research services exclusively to institutional clients?
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As per the existing provisions, exemption on compliance with client level
segregation of research services and distribution activities is given to only
entities providing research services exclusively to institutional clients if the client
signs a standard waiver.
Institutional clients/QIBs are sophisticated investors who have necessary skills,
knowledge and means to protect their interests and take informed decisions.
Accordingly, in exercise of power under Regulation 33 of RA Regulations and
for ease of doing business, it is clarified that even in cases where research
service is not exclusively provided to institutional clients/QIBs, all research
analysts/entities are exempted from ‘client level segregation of research and
distribution activities’ for their institutional clients/QIBs if such a client provides
a standard waiver. Client may also provide such standard waiver through e-
mail or any other electronically verifiable mode. However, such exemption shall
not be applicable in case of clients other than institutional clients/QIBs.
36. For technical recommendations, whether a mere technical chart with a
time stamp shall suffice as a research rationale?
Research analyst or research entity are required to maintain the rationale for
arriving at research recommendations. They are required to have adequate
documentary basis, supported by research, for preparing a research report and
shall ensure that recommendations in the research report are corroborated by
relevant data and analysis forming the basis for such research service.
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