SEBI has notified Regulations for research analysts on 1 September 2014, but the same will come into effect three months from its publication in the official gazette. These Regulations provide for the mandatory registration of research analysts and regulation of their activities. The focus of these Regulations is on minimizing potential and actual conflicts of interests in research reports issued by research analysts by imposing measures like trading restrictions on research analysts and placing limitations on public appearances by them. These Regulations also seek to regulate the activities of proxy advisors by imposing mandatory registration, trading restrictions and disclosure requirements. It also tries to bring within its scope the activities of foreign based research analysts who publish research reports on securities listed or proposed to be listed in India by requiring them to enter into an agreement with a domestic research analyst for distributing a research report. The domestic research analyst is then required to review the report for any untrue statement or false or misleading information.

There are a few areas of concern that need to be addressed in the Regulations, going forward. Firstly, the capital adequacy requirements for research analysts should be removed, atleast for individual research analysts as it is not clear how net worth is related to the ability of the research analysts to make stock recommendations. Secondly, the disclosure obligations placed on research analysts appear to be very onerous as they are also required to make disclosures on behalf of their relatives. Thirdly, the Regulations should provide for the liability of research analysts in case of non-compliance with the decisions or directions of the body corporate or the self-regulatory organization which may be recognized by SEBI to regulate the activities of research analysts. This step will ensure the enforceability of the decisions of the SRO.