Securities and Exchange Board of India (SEBI) had recently issued some new rules regarding Research Analysts. However, Research Analysts (RAs) are now opposing these rules. Even some big names have expressed their intention to shut down their services if the rules are not rolled back. SEBI had issued a circular named ‘Guidelines for Research Analysts’ on January 8. Research analysts with whom Moneycontrol spoke say that these rules have simplified the process of getting registered as research analysts for new people. But the burden of following the rules has increased for already registered analysts.
Analysts fear that such a stance by SEBI will allow people with ‘bad intentions’ to enter the market and in the future the regulator will have to impose more stringent rules to stop this. This will make it difficult for honest professionals to work.
Sandeep Parekh, founder of Finsec Law Advisors and former legal head of SEBI, said on ” He warned that if this continues, “the market will be left with only unqualified and dishonest advisors.”
Sandeep Parekh, founder of Finsec Law Advisors and former head of SEBI’s legal and enforcement department, said on social media platform If this continues, then “only the incompetent and dishonest, or the incompetent or dishonest consultants, will be left in the market”.
Parekh also shared the posts of some analysts, in which they have mentioned the decision to stop services due to the new rules. One of these posts was also of Neeraj Marathe, proprietor of Sentinel Research. Marathe wrote, “When the rules related to RAs were proposed last year, I had stopped my services. But I thought that the final rules would be better. But the final rules turned out to be even worse!” While sharing the decision of another research analyst to discontinue his services, Marathe said that he will also do the same.
Impact on long-term investment
The biggest concern is related to the ban imposed on charging advance fees. According to the new rules, RAs can take only three months’ fees in advance.
“The additional costs and efforts for client onboarding (agreement, KYC, CKYC, etc.) and other processes are still manageable,” Stalwart Advisors wrote in a post announcing the closure of its research services. renewal) is unacceptable to us as it shifts our focus to short-term activities.”
He further added, “We clearly understand that the big money is never in continuously buying or selling shares, but in waiting patiently for the right opportunity and then taking advantage of them.” He also said that his average investment time period is 3 to 5 years and due to his consistent investment in the market, he has got many multibaggers.
Dispute over fee limit also
Independent research analyst Nitin Mangal described the new rules as a “disaster”. He termed the maximum fee limit of Rs 1,51,000 per family annually on research analysts as unfair. Mangal said, “How can fees be limited in the service industry? Not everyone’s work is the same. Some take 15-20 days to prepare reports, while some people give intraday tips. How to put everyone in one category? May go?”
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