On 16-12-2024, the Securities and Exchange Board of India (‘SEBI’) notified the SEBI (Research Analysts) (Third Amendment) Regulations, 2024 to amend the . The Regulations came into force on the day of its publication in the Gazette, i.e., 16-12-2024.
Key Points:
The amendment has provided many new definitions under Regulation 2(1), such as “family of an individual research analyst”, “non-individual”, “part-time research analyst”, “persons associated with research services”, “research services”, “trading calls”, etc.
In clause (t) of Regulation 2(1), the definition of research analyst has been shortened and now only defines it as a person who, for consideration, is engaged in the business of providing research services. Previously, the definition mentioned the tasks that a research analyst was responsible for in order to define an analyst.
Under the amended Regulation 6(i), any partnership firm can now apply for the grant of a certificate of registration, where previously such ability was only afforded to an individual, a body corporate, or a limited liability partnership.
For seeking a registration certificate under Regulations 6(ii), (iii), (iv), and (v) there is an increased number of persons who are required to be appropriately qualified and certified as per Regulation 7 depending on who the applicant is.
In Regulation 7, the scope of who needs to have the prescribed qualifications has been widened.
In Regulation 7(1)(i), the qualifications have been amended to mean that only that qualification, degree, or diploma will be valid which is received from a Centre or State recognised university/institution or a recognised foreign university, institution, or association. Additionally, certain qualifications under Regulation 7 have been removed.
Under Regulation 8 the term capital adequacy has been replaced with “deposit”. It also provides that a research analyst shall maintain a deposit of such sum as specified by the Board and how such deposit shall be maintained.
A limitation of a total of 75 clients that a part-time research analyst can have at any point in time, has been prescribed under Regulation 13(iv).
In Regulation 19, clause(vii) has been added whereby, a research analyst or entity will have to disclose the extent of use of Artificial Intelligence tools in providing research services to the client.
Newly added Regulation 19A provides that a research analyst or entity has to maintain a functional website containing certain details specified by the Board.
Clause (4) has been added to Regulation 20 which states that the Research analyst or entity has to ensure that the recommendations in the research report are corroborated by relevant data and analysis.
Under Regulation 24, which provides for the general responsibilities of a research analyst or entity, three new sub-clauses have been added.
Regarding the maintenance of records under Regulation 25(1), four more types of records will now have to be maintained by the research analyst or entity.
Regulation 26(1) has been amended to provide for who shall be appointed by a non-individual research analyst or entity.
A new Regulation 26C has been added which provides for client-level segregation of research services and distribution activities.
A new Form C illustrating a certificate of registration as a part-time research analyst has been inserted in Schedule 1.
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