Introduction: The Securities and Exchange Board of India (SEBI) has ushered in a new wave of regulatory reform. The most recent consultation paper dives into the arena of Research Analysts, intending to set up a supervisory body for their administration. Here’s what you need to know.
A Glance at the Objective: SEBI’s primary focus with this consultation paper is to gather public opinion on the possibility of recognising a body corporate that would administer and oversee Research Analysts (RAs) as per the SEBI (Research Analysts) Regulations, 2014.
Historical Context: Drawing a parallel to a previous initiative, SEBI had identified the BSE Administration & Supervision Limited (BASL) under the Investment Advisers Regulations, 2013, to oversee and administer Investment Advisers (IAs). This move had proven to be effective in bolstering the investment advisory domain’s transparency and efficacy.
The New Proposal in Focus: SEBI’s newest proposal revolves around forming an entity similar to the IAASB for Research Analysts, tentatively named the Research Analyst Administration and Supervisory Body (RAASB). This body will:
1. Oversee and administer the RAs, just as in the case of IAs.
2. Ensure that the newly established framework doesn’t impose any extra financial strain on the RAs.
3. Amend the existing RA Regulations to make RAASB membership a prerequisite for acquiring the RA registration certificate.
Your Opinion Matters: SEBI has always emphasized public participation in its policy-making process. With this consultation paper, the public, market intermediaries, and other stakeholders are encouraged to share their insights. Responses can be structured based on the proposal, comments or suggestions, and their rationale. The deadline for submission is September 12, 2023, and stakeholders can send their opinions to [email protected].
Conclusion: As SEBI continues to reinforce its regulatory framework, the emphasis remains on enhancing the transparency and integrity of the financial markets. The proposal for the establishment of RAASB mirrors this sentiment, ensuring a structured approach to the administration and supervision of Research Analysts. It’s an opportunity for stakeholders to shape the future of India’s financial market landscape.
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Securities and Exchange Board of India
Consultation Paper on Recognition of Body Corporate for Administration and Supervision of Research Analysts
Aug 22, 2023 | Reports : Reports for Public Comments
1. Objective
1.1. The objective of this consultation paper is to seek comments from public on the proposal for recognition of body corporate for administration and supervision of Research Analysts (‘RAs’) under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 (‘the RA Regulations’).
2. Background
2.1. In terms of regulation 14 of Securities and Exchange Board of India (Investment Advisers), Regulations, 2013 (‘the IA Regulations’), Securities and Exchange Board of India (‘SEBI’) has granted recognition to an entity designated as “Investment Adviser Administration and Supervisory Body” (‘IAASB’) for administration and supervision of Investment Advisers (‘IAs’). After seeking interest of eligible stock exchanges, BSE Administration & Supervision Limited (‘BASL’), a wholly owned subsidiary of BSE Limited, has been granted recognition as IAASB for a period of three years from June 01, 2021. Further, vide circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/579 dated June 18, 2021, SEBI has provided a framework for administration and supervision of IAs inter alia specifying the role and responsibilities of IAASB.
2.2. Similar to the IA regulations, regulation 14 of the RA Regulations also provides that SEBI can recognise any body/body corporate for administration and supervision of RAs on such terms and conditions as may be specified by SEBI. It also provides that SEBI may specify that no person shall act as RA unless he is a member of a recognised body/body corporate and in such event, provisions of the RA Regulations and bye-laws or articles of such body/body corporate shall apply mutatis mutandis to such RA.
3. Proposal
3.1. Considering the evolving nature of business of RAs, it is proposed that, on similar lines as IAASB, SEBI may recognise a body, designated as Research Analyst Administration and Consultation Paper on Recognition of Body Corporate for Administration and Supervision of Research Analysts Supervisory Body (‘RAASB’), to administer and supervise RAs and thereby extend the framework for administration and supervision to RAs as in the case of IAs.
3.2. The proposed RAASB shall not place any additional financial burden on the member RAs and shall be fee neutral to them. The application fee and registration fee as specified presently in the RA Regulations is proposed to be rationalised accordingly.
3.3. Further, it is proposed to amend regulation 6 of the RA Regulations to provide that membership of RAASB shall be one of the eligibility criteria for consideration of grant of certificate of registration as RA.
4. Public Comments
4.1. Public comments are invited on the aforesaid proposal at para 3 in the following format:
| Name of entity/person/organisation: | |||
| Contact Details: | |||
| Category: whether market intermediary/participant (mention type or category) or public (investor, academician etc.) | |||
| Sr. No. | Proposal | Comments/Suggestions | Rationale |
| Page No. Para No. | |||
4.2. Comments may be forwarded by email to [email protected] latest by September 12, 2023. While sending the email, kindly mention the subject as “Comments on Consultation Paper on Recognition of Body Corporate for Administration and Supervision of Research Analysts”.
Deputy General Manager
Division of Policy II
Market Intermediaries Regulations and Supervision Department
Securities and Exchange Board of India
SEBI Bhavan II, Plot No. C-7, “G” Block, Bandra Kurla Complex
Bandra (East), Mumbai – 400 051
Issued on: August 22, 2023
