SEBI-Research-Analysts-Regulations-2014

Research / Recommendations once upon a time required one to be connected to the right guys. Stock brokers usually seemed to be the most connected and even today, any call to a broker generally starts with “khabar kya hai” (What is the news). While stock broking in itself has come a long way since the time of out cry, the lure of news / tips has remained strong as always. Even today, in small mofussil towns, information from Bombay is seen as sacrosanct.

The advent of Internet and now Social media though has set about changes that could not be fathomed just a few years ago. These days, tips are plentiful and every other guy seems to be a expert in the market. The rules that have now been promulgated by SEBI is an attempt to ensure that there is some order to the chaos.

Hence anyone who wants to broadcast publicly his views (Television / Internet or any other public medium) is required to register himself with SEBI and provide details of his registration along with his recommendation.

A simple Google search on NSE / BSE tips turns out literally hundreds of websites peddling their wares, all for a small fee of course. With not many a site even bothering to inform as to who is the guy running the show, it all comes down to luring the chaps with promises of enabling them to make mind boggling returns. Will these guys bother to register? I sincerely doubt that since most of these are 1 man bucket shops with the intention to fleece anyone wishing to take a short cut to riches.

The rule by SEBI I believe is based on the SEC rule governing Research Analysts. But while, SEC requires one to pass a exam – Research Analyst Qualification Exam (Series 86 / 87), here all one requires is to pay a fee and register himself (if he meets certain qualifications).

SEBI has been instrumental in making the industry much safer than in the days before it came into existence when brokers used to literally do as they pleased. Broker defaults are not even heard these days even though the volume of transactions (both Qty and Value-wise) has gone up massively.

While the current step in reigning the Analysts does not meet all the requirements, it is a step in the right direction. What would be needed in future is some sort of Audit so that claims made by these research houses are backed by evidence and not just picked at random.

Gazette Notification: http://www.sebi.gov.in/cms/sebi_data/commondocs/RESEARCHANALYSTS-regulations_p.pdf

List of Registered Analysts: http://www.sebi.gov.in/sebiweb/home/pmd_mb.jsp?PmdIndxName=A&listCode=L