Section | Title | Description |
---|---|---|
13.1 | Role of SEBI in Regulation | Outlines SEBI’s purpose, powers, and function as the regulator for Indian securities markets. |
13.2 | SEBI (Research Analysts) Regulations, 2014 | Details the eligibility, responsibilities, and conduct rules for SEBI-registered research analysts. |
13.3 | Code of Conduct for Research Analysts | Highlights ethical practices, conflict disclosures, and integrity standards required by SEBI. |
13.4 | Research Report Guidelines | Explains mandatory report disclosures, certifications, and format rules for publishing equity research. |
13.5 | Penalties and Enforcement | Describes the consequences for violations, including penalties and disciplinary action by SEBI. |
The Indian financial market is governed by a well-defined legal and regulatory structure. Various regulators oversee different segments such as banking, capital markets, insurance, corporate affairs, and insolvency to ensure fair, transparent, and stable market functioning.
The apex ministry responsible for overall economic policy, financial legislation, capital markets, and fiscal management. It includes departments like DEA, DFS, and Revenue.
Regulates corporate governance, company registrations, and enforces the Companies Act. Ensures financial disclosures, transparency, and corporate responsibility.
India’s central bank and monetary authority, regulating banking, currency issuance, interest rates, and managing foreign exchange reserves and financial stability.
Regulator of India’s securities market. It protects investor interests, promotes fair trading, regulates intermediaries, and ensures transparency in equity markets.
Oversees and regulates India’s insurance sector. Ensures solvency of insurers, protection of policyholders, and orderly development of insurance markets.
Regulates insolvency professionals and proceedings under the Insolvency and Bankruptcy Code. Ensures time-bound resolution of insolvencies for corporates and individuals.
The Indian securities market is governed by a set of well-established regulations that aim to ensure transparency, protect investor interests, and promote orderly development. Below are key regulatory frameworks enforced by SEBI and the Government of India:
This Act provides the legal framework for regulating stock exchanges and contracts in securities. It empowers SEBI to regulate and recognize stock exchanges, and defines valid contracts for securities trading.
The SEBI Act established the Securities and Exchange Board of India as the regulatory authority for capital markets. It gives SEBI powers to protect investors, regulate intermediaries, and monitor market practices.
This regulation aims to prevent trading based on unpublished price-sensitive information (UPSI). It mandates disclosure norms, trading windows, and codes of conduct for listed companies and intermediaries.
Also known as SEBI (FUTP) Regulations, it prohibits market manipulation, price rigging, misleading statements, and fraudulent activities in the securities market. Amended in 2007, 2012, and 2013.
These regulations govern the eligibility, registration, code of conduct, and responsibilities of research analysts to ensure quality, transparency, and unbiased equity research.
The Securities and Exchange Board of India (SEBI) has laid down a detailed Code of Conduct for registered research analysts under the SEBI (Research Analyst) Regulations, 2014. This code ensures ethical conduct, integrity, transparency, and objectivity in securities research and recommendations.
This code helps maintain investor confidence and ensures that research analysts provide fair and unbiased advice. Violations may result in penalties, suspension, or cancellation of registration by SEBI.
All SEBI-registered research analysts must follow this code strictly while preparing research reports or issuing recommendations to ensure ethical standards and investor protection.
SEBI has provided an extensive framework under the SEBI (Research Analyst) Regulations, 2014 to manage conflicts of interest, enhance transparency, and ensure professionalism in research reporting. Below are key regulations applicable to research analysts and their organizations:
Requires research entities to establish internal policies and procedures to identify and manage conflicts of interest.
Specifies that analyst compensation must not be linked to specific merchant banking or brokerage outcomes.
Provides limitations on publication of research reports, public appearances, and overall business conduct.
Outlines disclosure requirements in research reports such as conflicts, shareholding, compensation, and certification.
Mandates publication of research-related disclosures and documents on the official website.
Specifies minimum content requirements for research reports including recommendations, assumptions, and risk factors.
Regulates the issuance of investment recommendations in public media including print, television, or social media.
Lays down conditions for distribution of research reports and ensures fair access to all clients.
Requires additional disclosures by proxy advisers regarding voting recommendations and conflict handling.
Mandates maintenance of records such as published reports, drafts, communications, and disclosures for 5 years.
Requires appointment of a qualified compliance officer to oversee regulatory adherence and handle grievances.
Outlines the framework for internal dispute resolution within research analyst entities.
Covers redressal of investor grievances through a clear and accessible mechanism.
Introduces client-level segregation of research and distribution services to maintain independence and avoid conflict.
Defines liability and enforcement measures in case of default, including penalties and restrictions imposed by SEBI.
Together, these regulations ensure that research analysts operate ethically, disclose all material facts, avoid biased opinions, and protect investor interests at all times.
To protect investors and promote fair trading, SEBI and stock exchanges have introduced several surveillance frameworks such as Graded Surveillance Measures (GSM) and Additional Surveillance Measures (ASM). These mechanisms help in identifying and regulating high-risk stocks to avoid price manipulation and volatility.
GSM is a SEBI-led initiative to monitor companies with consistent poor fundamentals, low market capitalization, or suspicious price movements. Stocks are placed under different stages with increasing levels of restrictions like trade-to-trade settlement, price band tightening, or periodic call auctions.
ASM aims to monitor stocks showing high volatility, abnormal price/volume behavior, or surveillance concerns even if their fundamentals are sound. ASM actions include margin requirements, circuit limits, and transfer to T2T segment.
Research Analysts (RAs) and Investment Advisers (IAs) must comply with SEBI’s advertisement code while promoting services through any form of communication:
These initiatives are aimed at improving investor protection, minimizing manipulation, and increasing transparency in the capital markets ecosystem.