 "SEBI")
The Securities and Exchange Board of India (Sebi) is mulling greater supervision of research analysts (RAs) through a recognised body, which will be responsible for administrative actions, monitoring activities and grievance redressal. The move comes amidst rising unsolicited stock recommendations and growing significance of financial influencers.
According to a consultation paper floated on Tuesday, the market regulator has proposed to recognise a body to be designated as Research Analyst Administration and Supervisory Body (RAASB), on the same lines of those for the investment advisers.
Sebi has further proposed that the registration with this body will be mandatory as one of the eligibility criteria for seeking RA certification.
Currently, research analysts—those providing research reports or buy and sell recommendations—have to register with the market regulator. Sebi has introduced a detail framework for eligibility criteria and other requirements for those registering as research analyst.
Industry experts said that the move come appoint body corporate will ease the regulatory burden on Sebi and help free up its resources.
In June 2021, Sebi had recognised BSE Administration and Supervision Limited (BASL), a wholly owned subsidiary of BSE, as the Investment Adviser Administration and Supervisory Body (IAASB) for a period of three years.
Recently, the market regulator added the responsibility of monitoring and approving advertisements by investment advisors in adherence to the new advertisement code.
The IA body also has the onus to maintain databases, submit periodical reports, issue warnings and refer to Sebi for enforcement action, along with on-site and off-site supervision of investment advisers.
Sebi wants to extend this framework to RAs through a recognised body.
However, Sebi assured that the proposed RAASB will not place any additional financial burden on the RAs and will be fee neutral to them.
“The application fee and registration fee as specified presently in the RA Regulations is proposed to be rationalised accordingly,” said Sebi.
The markets regulator has sought comments on the proposal by September 12.
