SEBI registered Research Analyst
There are experts available in all fields. We consult doctors for health, engineers for various technical matters, chartered accountants for different financial as well as tax matters. Similarly insurance and investment advisors are also available to help people. Many of us do trading in stock markets. Not everyone is well equipped to gather information and analyse it before investing. To carry out research pertaining to a stock/commodity or a company, a thorough knowledge is required to do the decision making process and arrive at a sound conclusion. This process cannot be done by a layman. The expert that can do this job is called a ‘Research Analyst’.
Thus-A research analyst is the one who does the analysing work whether to buy or sell or hold a particular stock, mutual fund or a commodity. Who will decide the creditworthiness of an analyst? Because anybody with a working knowledge of trading may introduce him/her as a research analyst. Credibility of any of its members in any field comes only through a recognised institution. In India, Securities and Exchange Board of India felt the need to regulate the activities of research analysts and hence ‘SEBI Research Analyst Regulations’ were introduced in 2014. No person shall act as a research analyst or research entity or hold itself out as a research analyst unless he has obtained a certificate of registration from the SEBI under the SEBI (Research Analysts)Regulations,2014.
A Research analyst is defined as a person who is primarily responsible for-
- Preparation or publication of the content of the research report; or
- Providing research report;or
- Making ‘buy/sell/hold’ recommendation;or
- Giving price target;or
- Offering an opinion concerning public offer, with respect to securities that are listed or to be listed in a stock exchange, whether or not any such person has the job title of ‘research analyst’ and included any other entities engaged in issuance of research report or research analysis.
Individuals, partnership firms and private limited companies can get themselves registered as research analysts according to the regulations.
Research Report means-
Any written or electronic communication that includes research analysis or research recommendation or an opinion concerning securities or public offer, providing a basis for investment decision and does not include the following communications:
- comments on general trends in the securities market;
- discussions on the broad-based indices;
- commentaries on economic, political or market conditions;
- periodic reports or other communications prepared for unit holders of mutual fund or alternative investment fund or clients of portfolio managers and investment advisers;
- internal communications that are not given to current or prospective clients;
- communications that constitute offer documents or prospectus that are circulated as per regulations made by the Board;
- statistical summaries of financial data of the companies;
- technical analysis relating to the demand and supply in a sector or the index;
- any other communication which the Board may specify from time to time
The importance and role of a Research Analyst:
Why does one need a research analyst when plenty of market advisors are doing this kind of job in a traditional way? What a professionally well equipped person can do, cannot be compared with the conventional way of advising people. If someone is qualified and experienced enough to do a particular work, our natural inclination is to hire them instead of depending upon any random unreliable source.
The role of a research analyst both for individuals and companies is very important. Dynamics of the stock market are complex and analysts use the latest technologies to get the relevant information. They are the best professionals to know about the current market and financial scenario. In future their significance is only going to rise. You can get the best advice from such analysts to buy, sell or hold securities using compilation of reports and projections. They take care of the client portfolio, keeping the individual goals in mind. Optimising profits and raising the overall financial well being by capital protection and appreciation is possible with the help of a highly competent Research Analyst. They possess a set of skills like analytical skills, logical reasoning, critical thinking, attention to detail etc.
How to become a SEBI Registered research Analyst?
A person who wants to act as a Research Analyst must apply to SEBI for registration before undertaking any activity as Research Analyst. In case you fall under the purview of SEBI Registration, you have to fulfill the mandatory requirements before making an application with SEBI.
To decide whether or not you fulfill the criteria can be decided by the following factors.
If you fall under any of the below categories, you are required to get yourself registered with SEBI.
A person who is –
1. engaged in preparation or publication of the content of research reports;
2. responsible for providing research reports;
3. making ‘buy/sell/hold’ recommendation on securities;
4. giving price targets on securities;
5. offering an opinion concerning IPO, further public offer, offer for sale, disinvestments, takeover, buy-back or delisting of securities;
It further includes-
1. Any associated person who reports directly or indirectly to such a research analyst in connection with activities like giving price targets and preparing research reports.
2. A SEBI registered merchant bankers, investment bankers or stock brokers or underwriters who are also engaged in providing research reports.
For the following SEBI registration is not necessary
Any person who –
- Comments on general trends in the securities market
- Discusses the broad-based indices
- Comments on economic, political or market conditions
- Gives statistical summaries of financial data of companies
- Provides technical analysis relating to demand and supply in a sector or index based on trading volume and price
- And is engaged in clerical activities/ marketing activities, back office assistance, support services etc. in relation to publication and/or distribution of research reports.
It also includes-
1. Periodic reports such as sending financial account statements, annual reports or other communications prepared by unit holders of mutual funds or AIFs or clients of portfolio managers and investment advisers.
2. Any internal communication that is not given to current or prospective clients.
3. Any communication that constitutes offer documents or prospectus that are circulated as per regulations made by the Board.
4.Investment Advisers, Credit Rating Agencies, Asset Management Companies and Fund Managers (i.e. fund managers of a mutual fund or AIFs or venture capital fund or portfolio managers. However, they are required to comply with the provisions of Chapter III of the RA Regulation if they issue research reports or research analysis.
Those who fall in any of the above categories, SEBI registration is not required for them.
Conditions to be fulfilled in order to be a SEBI registered Research Analyst
- Qualification-The qualifications that you need to possess before making an application with SEBI:
You should have the following minimum qualification-
- A professional qualification or postgraduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, financial services or markets provided by:
(a) a university which is recognized by University Grants Commission or by any other commission/council/board/body established under an Act of Parliament in India for the purpose; or
(b) an institute/association affiliated with such university; or
(c) an institute/ association/university established by the central government or state government; or
(d) autonomous institute falling under administrative control of Government of India;
(d) autonomous institute falling under administrative control of Government of India;
OR
- A professional qualification or postgraduate degree or post graduate diploma which is accredited by All Indian Council for Technical Education, National Assessment and Accreditation Council or National Board of Accreditation or any other council/board/body set up under an Act of Parliament in India for the purpose;
OR
- A graduate in any discipline with an experience of at least five years in activities relating to financial products or markets or securities or fund or asset or portfolio management.
OR
- NISM Certification-If you want to pursue a career in the field of finance, becoming a SEBI Research Analyst is an option. You can be self-employed and NISM certification is a course that gives you a license at an affordable cost.
Few details about the same: NISM stands for National Institute of Securities Markets and it is headquartered in Navi Mumbai. It is a public trust established by SEBI. You will be able to complete the course without investing a number of years unlike a CA,CFA or MBA(Finance)exam which may require more time. You can visit the portal and register yourself. The registration fees to appear for the exam shall have to be paid. To reappear for the exam you have to pay the same fee again. To know more about the post graduate program required to become a research analyst the hyperlink is given here-
Post Graduate Program in Securities Market of not less than 1 year offered by NISM
2. Certification
You should have a NISM Certificate for Research Analyst. Click here to check the details of the certificate you need to procure. The certification should be valid at all times, which means that in case the validity of the certificate is about to expire, you should renew the certificate well in advance in order to ensure the continuity of the certification.
Documents required for SEBI application-
- Identity Proof
- Address Proof
- Proof of Qualification(Degree Certificates, NISM exam certificates)
- Experience Certificate in case of graduates ( Insurance agency license, MR ARN card etc.)
- CIBIL Score
- Net worth certificate from a Chartered Accountant
- Income Tax Returns for the last 3 years(Mandatory for Individuals)
- Various declarations.
Further details are explained here.
3. Experience
An experience of 5 years is required in activities relating to financial products or markets or securities or fund or asset or portfolio management, if you hold only a graduate degree.
In other cases, where the post graduation degree is available, having an experience is not mandatory. However, it’s preferable to have an experience.
It should be noted that the qualification, certification and experience requirements shall be fulfilled by an individual registered as Research Analyst. In case, where the Research Analyst is a non-individual, then individuals employed as Research Analyst and partners of Research Analysts shall fulfill the above requirements.
For example if you have a B COM degree with 5 years experience as required and take the NISM exam, you will fulfill the qualification and certification requirement. But if you have a B COM degree with no experience as required, then you do not meet the qualification and certification requirement.
4. Capital Adequacy:
The capital adequacy required are as follows:
For individuals and partnership firms– Net worth in the form of net tangible assets should not be less than INR 1 Lac.
For non-individuals (Body Corporates and LLPs)– Net worth should not be less than INR 25 Lakhs.
Net worth means the aggregate value of paid up share capital plus free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses.
The net worth certificate shall be obtained by a Chartered Accountant and shall be attached to the form while making an application with SEBI.
5. Adequate Infrastructure:
You should ensure to have an adequate infrastructure which shall include office space, office equipment, furniture and fixture, communication facilities, research capacity, research software for undertaking research analysis activities.
6.Application and Fee Structure:
Once the above criteria are fulfilled, proceed with making an application with SEBI for RA. All the details mentioned in Form A are required to be provided along with all the necessary documents as attachments.
After Registration on SEBI Portal there opens Research Analyst form A. For this, login to https://siportal.sebi.gov.in/intermediary/index.html and complete the initial application proces to proceed with the application with SEBI. In order to grant the registration certificate under the RA Regulations, SEBI might want the applicant to furnish further information or clarification on the submitted documents.
There are 7 sections in the application form as mentioned below:
Section 1. General Information
General Information consists of name, Registered office address, Contact details of the Registered Person and other details.
In addition to this, you have to write about your present and past activities majorly related to investment and personal finance.
Section 2. Details of applicant
In this section, you have to upload self-certified copies of identity proof, address proof, supporting documents in respect of qualification. NISM Research analyst exam certificates, 3 years Income tax return, and a copy of a net worth certificate from a chartered accountant.
Section 3. Details of Research Services
This is the main section regarding the research analyst registration application and here you need to upload a proper Business Plan, proposed research activities,Internal Policy to address conflict of Interest, Standard Disclosure, and other relevant necessary information. Call us to get all the relevant Documents.
Section 4. Details of infrastructure
In this section, you have to upload a complete list of infrastructure you have one by one and attach all the necessary proof you have for infrastructure. Also need to upload a declaration regarding infrastructure. Details of office space, office equipment, furniture and fixtures, communication facilities, research capacity, research software for undertaking research analysis.
Section 5. Other Information and declaration
As discussed above, we would like to know that there are lots of declarations required in the process of registration as a Research analyst. In this section, you have to upload all the other necessary information and declarations.
Section 6. Declaration Statement
This is the automatic declaration you will get in FORM A .
Section 7. Fees Details
Fees Details will be shown in FORM A automatically.
After filing Form A online, you will get FORM A in your mail id, send this FORM A along with all the necessary documents and information to the nearest SEBI office.
Fees Structure for the application with SEBI:
| Type of Applicant | Application Fees(INR) Non-refundable | Registration Fees(INR) |
| Individuals and Partnership Firms | 5,000 | 10,000 |
| Body Corporate and LLPs | 50,000 | 5,00,000 |
The application fees paid at the time of making the application is non-refundable.
Once you pay the application fees and file Form A with SEBI for registration, SEBI will scrutinize the form and the documents uploaded. In case they need any additional information in order to approve your application, they will raise a query along with the timeline within which one should revert to the queries raised.
SEBI on being completely satisfied with the documents submitted will approve the application and request you to pay the registration fees. Upon payment of the registration, SEBI will issue the license. The certificate of registration shall be valid unless it is suspended or cancelled by the Board.
The application might get rejected if the Board is of the opinion that a certificate should not be granted to the applicant. The applicant shall be given an opportunity of being heard. The decision of the Board rejecting the application shall be communicated to the applicant within thirty days of such decision. Where an application for a certificate is rejected by the Board, the applicant shall forthwith cease to act as a research analyst.
Creditworthiness of a SEBI registered Research Analyst-
The best thing in your interest is not to hire any unregistered analyst.
In case you want to hire a research analyst, you can find the list of names of SEBI registered analysts in India. When you find any research analyst, you must ask for their SEBI registration number. Each registered intermediary has their own SEBI registration number with a valid license. Once they provide their registration number, you can verify the same through SEBI website www.sebi.gov.in.
There are more than 700 SEBI registered Research Analysts. But the majority of them are brokerage companies. 300-400 of them are providing services to retail clients excepting those who have obtained their registration but are not functioning. How will you find the best among them? Merely because an individual, a firm or a company is registered, does not make them the best. Top SEBI registered Research Analyst shares risk associated investment in stock market. Such an analyst gives at least 80% genuine results in the stock market. If 8 recommendations out of 10 are profitable, it is trustworthy enough to rely on for making decisions. Do not fall for the claims made by any of them. You can check the working strategy, research facility, skills of their team, registered office and infrastructure to find out whether they are the best or not.
The primary virtues that you should consider while choosing a SEBI registered Research Analyst for yourself-
- Accountability: A SEBI registered Research Analyst must be accountable for the services offered. The charge which they take from their clients must justify the amount of responsibility and accountability which they hold.
- Discipline: A disciplined analyst will keep a close watch on the market trends and the objectives of their clients. The best thing they can do is to save you from all major threats before everything gets wiped out. Constantly and consistently doing the best of kind job will make an analyst very disciplined and such an analyst will be the best suitable for you.
- Integrity: This means that their honesty and principles make them the most reliable ones. Their objective should be to monitor the clients investments with great care without tainting them with their own motives.
- Commitment: The expected level of commitment is a constant and vigilant support at any given time. Recommendations to trade in a few stocks, mutual funds or other commodities will not be sufficient. It is an all round expert assistance that a client looks for.
- Transparency: Most of the analysts fail to continue to support their clients. An Earning oriented approach will not work. They need to be transparent in their client support policies.
- Quality maintenance: Doing constant research is an analyst’s main task. Aligning their decisions with their research should be part of the process. Since this is a continuous process, providing a high quality, professional assistance is always a prerequisite.
The above discussion covers all the major points relevant to becoming a SEBI registered Research Analyst and other related topics affecting this profession.
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Bhoi Smrutirekha Dharanidhar