To increase the number of research analysts, Sebi plans to lower the bar
Euphoria in the stock market has prompted scores of new investors to scour the internet for stock tips, giving rise to a host of illegal stock advisory channels. Despite the booming demand, only 1,371 entities are officially registered with Sebi as research analysts (RAs). In response, the markets regulator has proposed relaxing the rules for becoming an RA.
Sebi first released rules for RAs in 2014. The idea was to create a framework through which individuals and entities could provide research and advisory services to the masses. As internet connectivity improved, many began to offer these services online. Now, Sebi has said that anyone who earns money – directly or indirectly – from research reports on securities should be registered as an RA. It’s not yet clear whether this would include brokers who give buy or sell calls.
Two hurdles in getting an RA licence are the strict educational qualification and net-worth requirements. The current rules require RAs to have a postgraduate degree or diploma in a specified finance-related field. If the person is only a graduate, an additional five years of experience in a specified field is mandatory. A person also needs to have a minimum net worth of ₹25 lakh to set up a limited liability partnership (LLP) or company.
Sebi has proposed reducing the minimum educational qualification to a graduate degree in a specified field, including finance, accountancy, business management, commerce, economics, capital markets, banking, insurance and actuarial science. For those who simply offer research services, any graduate degree will suffice.
Also read: India’s first small and medium Reit faces pushback from existing investors
It has also proposed removing the net-worth requirement,
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