Regulator: SEBI

1.10 Client level segregation of research and distribution activities --- To ensure client level segregation at research analyst’s or research entity’s group/family3 level as per Regulation 26C(5) of RA Regulations, following compliance and monitoring process shall be adopted: a. Existing clients, who wish to avail services of the RA, will not be eligible for availing distribution services within the group/family of the RA. Similarly, existing clients who wish to take distribution services will not be eligible for availing research services within the group/family of the RA. b. A new client will be eligible to avail either research services or distribution services within the group/family of RA. However, the option to avail either research services or distribution services shall be made available to such client at the time of on-boarding. c. “Client” under these guidelines shall include individual client or non-individual client. d. The client shall have discretion to continue holding assets prior to the applicability of this segregation under the existing research/ distribution arrangement. However, the client shall not be forced to liquidate/ switch such existing holdings. e. PAN of each client shall be the control record for identification and client- level segregation. f. In case of an individual client, “family of client”4 shall be reckoned as a single client and PAN of all members in “family of client” would jointly and severally 3 “Group” and “family of an individual research analyst” shall be as per Regulation 26C (3) (iii) and Regulation 2(1)(fb) respectively of the RA regulations 4 “Family of client” shall be as per as per Regulation 2 (1)(fc) of the RA regulations be the control record. However, the same shall not be applicable for non- individual clients. g. The dependent family members shall be those members whose assets originate from income of a single entity, i.e., the earning client (individual) in the family. The client shall provide an annual declaration or periodic updation, as the case maybe, in respect of such dependent family members. h. RA shall maintain on record an annual certificate from a member of ICAI/ ICSI/ ICMAI or from an auditor (in case of individual RA)/statutory auditor (in case of a non-individual RA or research entity) confirming compliance with the client-level segregation requirements. Such annual certificate shall be obtained within six months from the end of the financial year starting from for the financial year ending March 31, 2025 and the same shall form part of compliance audit, in terms of regulation 25(3) of the RA Regulations. i. RAs providing research services exclusively to institutional clients and accredited investors may not be subject to compliance with the requirements of segregation of research and distribution activities provided that the client/investor signs a standard waiver stating the above. j. Stock broking is not considered as distribution activity for the purpose of regulation 26C of RA Regulations. k. RA/research entity shall ensure compliance under this clause latest by September 30, 2025.

Question: What regulation number is cited regarding Client level segregation of research and distribution activities?
Answer: Regulation 26C