Watch misni sdedn nises

SEBI Guidelines for Research Analysts: Key Updates & Compliance Tips

  • April 2 2025
  • Satheesh Kumar

If you're planning to become a SEBI-registered Research Analyst (RA) or already working in the field, there’s some big news you can’t afford to miss! SEBI (Securities and Exchange Board of India) has rolled out new guidelines aimed at making research analysis more transparent, fair, and accountable. Whether you're an investor relying on research insights or an aspiring RA, these changes will impact how research is conducted, shared, and regulated. Want to stay ahead of the game? Let’s break down the key updates in a way that’s simple, clear, and actionable!

Why Did SEBI Introduce New Rules?

Investors heavily depend on research analysts for stock recommendations, market predictions, and financial insights. However, concerns like misleading advice, lack of accountability, and excessive fees have been growing in the industry. These issues can lead to poor investment decisions and harm investor interests.

To address these concerns and promote transparency, ethics, and fair practices, the Securities and Exchange Board of India (SEBI) has introduced tighter rules for research analysts (RAs) and investment advisers. These new regulations aim to:

  • Enhance accountability by ensuring that RAs provide accurate, unbiased advice.
  • Protect investors from misleading or conflict-driven recommendations.
  • Regulate fees to ensure they are transparent and reasonable.
  • Improve transparency by requiring detailed disclosures and segregating research and distribution activities.
  • Ultimately, these changes are designed to strengthen investor confidence, promote ethical conduct, and ensure a more transparent and trustworthy financial advisory ecosystem.

Key Changes in SEBI’s Guidelines for Research Analysts

                   SEBI new rules

 

1. Higher Qualification & Certification Requirements

Research Analysts (RAs) and Investment Advisers (IAs) must meet specific qualification and certification standards to ensure competency in their services.

Key Points:

  • Qualification: RAs must have a graduate degree in finance, economics, business, or related fields. Advanced qualifications like MBA, CFA, or CFP are preferred.

  • Certification: RAs must be certified by a recognized body like NISM (e.g., NISM Series-X for Research Analysts) to meet SEBI standards.

  • Continuous Education: RAs should engage in ongoing professional development to stay updated with market and regulatory changes.

  • Notably, existing individual RAs, principal officers of non-individual RAs, employed research analysts, and partners are exempt from the updated qualification criteria. However, they must still obtain the NISM certification and adhere to other conditions specified under Regulation 7(3). ​

2. Fees Chargeable to Clients by Research Analysts (RAs)

As per Regulation 15A of the RA Regulations, Research Analysts (RAs) can charge fees for their services, subject to SEBI Circular ensuring fairness and transparency.

Key Points:

  • Fee Limit: RAs can charge a maximum of ₹1,51,000 per annum per family (for individuals and HUFs). This limit is revised every three years based on the Cost Inflation Index (CII).

  • Exemptions: The fee cap does not apply to non-individual clients, accredited investors, or institutional investors using proxy advisory services. Their fees are determined through contractual agreements.

  • Advance Fees: RAs may charge quarterly advance payments, but not beyond one quarter at a time.

  • Refund Policy: If services are terminated early, clients must receive a proportionate refund, with no breakage fees allowed.

  • Fee Disclosure: RAs must disclose fee limits, agreed charges, and details about the optional Centralized Fee Collection Mechanism (CeFCoM).

  • Implementation Deadline: Existing clients must comply by June 30, 2025, while the rule is immediately applicable to new clients.

These SEBI-registered research analysts' new regulations ensure fair, transparent, and client-centric fee structures for research services.

Learnyst Logo-25-1

3. Security Deposit Based on Client Base

  • To enhance financial stability and credibility, SEBI has mandated a security deposit requirement for Research Analysts (RAs). The deposit amount is determined based on the highest number of clients an RA had on any single day in the previous financial year.  
  • Deposit Structure:
    • Up to 150 clients → ₹1 lakh
    • 151–300 clients → ₹2 lakh
    • 301–1,000 clients → ₹5 lakh
    • Above 1,000 clients → ₹10 lakh

  • This deposit must be maintained in a scheduled bank and marked as a lien in favor of the Research Analyst Administration and Supervisory Body (RAASB), as per the prescribed guidelines. If the client count changes, RAs must adjust their deposit amount accordingly, with necessary revisions completed by April 30 of the following financial year.
  • SEBI will periodically review and update the deposit requirements as needed. Existing Research Analysts must comply with this rule by April 30, 2025, while new applicants must fulfill the deposit requirement immediately upon registration. These measures aim to strengthen the research analyst ecosystem and safeguard investor interests.

4. Registration as Both Investment Adviser and Research Analyst

SEBI allows individuals and partnership firms already registered as Investment Advisers (IA) to also obtain a Research Analyst (RA) registration, subject to specific conditions.

Key Conditions:

  • An Investment Adviser (IA) registered under the SEBI (Investment Advisers) Regulations, 2013 may apply for Research Analyst (RA) registration. However, they must comply separately with all SEBI rules, regulations, and reporting requirements under both the IA and RA regulations.

  • The applicant must provide an undertaking confirming that they will maintain a clear distinction between their investment advisory and research activities. This ensures that both services remain independent and do not influence each other.

By enforcing these conditions, SEBI ensures transparency, fairness, and investor protection in the financial advisory and research space.

5. Registration as a Part-Time Research Analyst

SEBI allows individuals to register as part-time Research Analysts (RAs), subject to specific guidelines and conditions. This provides flexibility for those who want to engage in research analysis on a part-time basis, while still adhering to regulatory standards.

Key Conditions:

  • A part-time Research Analyst must comply with all the applicable regulations under the Research Analyst Regulations.

  • The RA must clearly define their part-time status, ensuring it does not conflict with other professional commitments or full-time work.

  • Part-time RAs are required to maintain the same level of integrity and provide independent, unbiased research as full-time RAs.

  • They must also ensure they do not exceed the client limit or other thresholds set by SEBI, which would otherwise require full-time registration.

This flexibility allows individuals to contribute valuable research insights while balancing other professional responsibilities, without compromising on regulatory compliance or quality.

6. Appointment of an Independent Professional as Compliance Officer

As part of maintaining high standards of regulatory compliance, SEBI mandates the appointment of an independent professional as a Compliance Officer for entities like Research Analysts (RAs) and Investment Advisers (IAs). The Compliance Officer plays a key role in ensuring that the organization adheres to all applicable new rules, regulations, and internal policies.

Key Requirements:

  • The Compliance Officer must be an independent professional with sufficient experience and expertise in compliance and regulatory matters.

  • They should have a clear understanding of SEBI regulations and ensure that the organization remains compliant with both Research Analyst Regulations and Investment Adviser Regulations.

  • The Compliance Officer must report directly to the senior management or governing body of the firm, ensuring independence from the operational side of the business.

  • The officer is responsible for monitoring and ensuring compliance with all applicable laws and regulations, including filing reports and coordinating with SEBI on any compliance issues.

  • They should also maintain a record of compliance activities and assist in addressing any regulatory violations or breaches promptly.

By appointing an independent compliance officer, the organization ensures that its operations remain transparent, ethical, and in full alignment with SEBI's research analyst regulations, thereby fostering trust and credibility in the financial market.

7. Use of Artificial Intelligence (‘AI) Tools in Research Analyst (RA) Services

AI tools are increasingly being used in Research Analyst (RA) services to enhance research accuracy, efficiency, and insights. Here are key considerations for their use:

Key Requirements:

  • AI in Research: RAs can leverage AI to process large datasets, identify patterns, and predict trends, improving the quality of investment recommendations.

  • Accuracy and Oversight: AI-generated insights must be verified by human analysts to ensure accuracy, with clear communication to clients on AI’s role in the research process.

  • Regulatory Compliance: RAs must comply with SEBI regulations, maintaining unbiased analysis and ensuring AI doesn’t compromise the integrity of their work.

  • Disclosures: The use of AI must be disclosed to clients, with transparent reporting on how AI tools contribute to research findings.

  • Data Security: RAs must ensure AI tools comply with data privacy laws and securely handle sensitive client information.

AI can enhance research services, but RAs must balance its use with human oversight and regulatory compliance.

9. Research Services Provided by Research Analyst or Research Entity

Research Analysts (RAs) or Research Entities offer various research services aimed at providing clients with valuable insights to support their investment decisions. These services generally focus on financial markets, securities, and other investment products.

Key Research Services:

  • Equity Research: Analysis of stocks, including their potential for growth, risks, and investment value.

  • Sector and Industry Analysis: In-depth studies of specific sectors (like technology, healthcare, etc.), helping clients understand trends and opportunities within industries.

  • Macro-Economic Research: Research on broader economic factors, such as inflation rates, GDP growth, and market cycles, which affect investment strategies.

  • Fixed Income Research: Insights into bonds, interest rates, and debt instruments, including risk assessments and expected returns.

  • Investment Strategies and Portfolio Analysis: Tailored strategies and recommendations for building and managing a balanced investment portfolio.

  • Technical and Quantitative Analysis: Use of mathematical models, algorithms, and charts to predict market behavior and make data-driven predictions.

  • Corporate Governance and ESG Research: Evaluating companies based on governance, environmental, social, and ethical factors, supporting socially responsible investing.

Research services by RAs are essential for investors to make informed, data-backed decisions, and they must comply with SEBI regulations to ensure transparency and credibility.

9. Client-Level Segregation of Research and Distribution Activities

SEBI requires Research Analysts (RAs) and Investment Advisers (IAs) to clearly separate their research and distribution activities to avoid conflicts of interest.

Key Points:

  • Separation of Roles: Research and distribution/advisory activities must operate independently without overlap.

  • Independent Research: Research must remain unbiased and not influenced by sales or distribution goals.

  • Arms-Length Relationship: Firms must ensure no interference between research and sales functions.

  • Client Awareness: Clients should be informed that research is independent and not influenced by distribution targets.

This segregation helps maintain integrity and transparency in services provided to clients.

10. Guidelines for Recommendation of ‘Model Portfolio’ by Research Analysts (RAs)

Research Analysts (RAs) must follow guidelines when recommending model portfolios to clients.

Key Points:

  • Clear Disclosure: Model portfolios should be disclosed as generic and not tailored to individual client needs.

  • No Conflicts of Interest: Recommendations must be independent and not influenced by external factors.

  • Suitability: Portfolios should align with the client’s risk profile and financial goals.

  • Transparency: Any associated costs or charges must be clearly communicated.

  • Periodic Review: Portfolios should be regularly reviewed and updated.

These guidelines ensure ethical, transparent, and client-focused portfolio recommendations.

11. Disclosure of Terms and Conditions to the Client

Research Analysts (RAs) and Investment Advisers (IAs) must provide clients with clear disclosure of terms and conditions related to their services to ensure transparency and informed consent.

Key Points:

  • Clear Communication: All terms and conditions should be clearly explained to the client, including the scope of services, fees, and any risks involved.

  • Written Agreement: The terms should be provided in a written format for the client’s review and acknowledgment before any service is provided.

  • Disclosure of Fees: Full details of any fees, charges, or compensation models should be transparently outlined.

  • Service Scope: The terms should specify what services will be provided and any limitations or exclusions.

  • Consent: The client’s consent to the terms can be obtained in person or through any legally acceptable mode, including DigiLocker-enabled Aadhaar-based e-signature facility.

  • Regular Updates: If any changes occur, clients must be promptly notified of updated terms and conditions.

This ensures client understanding, consent, and transparency in the relationship between the RA/IA and the client.

12. KYC Requirements and Maintenance of Records

Research Analysts (RAs) and Investment Advisers (IAs) must comply with Know Your Customer (KYC) requirements and maintain proper records to ensure transparency, prevent fraud, and comply with regulatory standards.

Key Points:

  • Client Identification: RAs/IAs must collect valid KYC documents like a PAN card from clients, including proof of identity, address, and other relevant details, before providing services.

  • Ongoing Monitoring: Regular monitoring of client accounts and transactions is required to detect suspicious activity and ensure compliance with anti-money laundering (AML) regulations.

  • Record Maintenance: All KYC records must be maintained for a minimum of 5 years after the termination of the client relationship or service.

  • Confidentiality: Client records should be kept confidential and protected from unauthorized access, in compliance with data privacy laws.

  • Updates: RAs/IAs must ensure that client information is updated whenever there is a significant change (e.g., change of address or identity).

By adhering to KYC guidelines, RAs/IAs help safeguard the financial system and maintain transparency with clients.

13. Compliance Audit Requirements

Research Analysts (RAs) and Investment Advisers (IAs) are required to undergo regular compliance audits to ensure adherence to regulatory standards and internal policies.

Key Points:

  • Annual Audit: RAs/IAs must conduct an annual compliance audit to assess their adherence to SEBI regulations and other applicable laws.

  • Independent Auditor: The audit must be performed by an independent professional or firm with relevant expertise to ensure unbiased review and findings.

  • Audit Scope: The audit should cover all areas, including client dealings, fees, record-keeping, and compliance with KYC, AML, and other regulatory requirements.

  • Audit Report: A detailed audit report must be submitted to SEBI and maintained for future reference.

  • Rectification of Issues: Any identified compliance gaps or violations must be addressed promptly, with corrective actions taken.

Regular compliance audits help ensure that RAs/IAs operate within the regulatory framework, maintain transparency, and protect client interests.

14. Requirements of the Website and the Details on the Website

Research Analysts (RAs) and Investment Advisers (IAs) are required to maintain an official website that complies with regulatory requirements and provides essential information for clients and investors.

Key Points:

  • Website Requirement: RAs/IAs must have a functional website for transparency and to provide easy access to relevant information.

  • Essential Details on the Website:

    • Services Offered: Clear details of the research or advisory services provided.

    • Fees and Charges: Transparent disclosure of all fees, including service charges and any other applicable costs.

    • Registration Information: Display of SEBI registration details, including registration number and validity.

    • Disclosures: Important disclosures regarding risks, terms and conditions, and conflict of interest policies.

    • Client Testimonials or Reviews: While optional, displaying feedback from clients can help establish credibility (ensuring it adheres to regulations).

    • Contact Information: Contact details (address, phone number, email) for client queries and assistance.

  • Regular Updates: The website must be regularly updated to reflect any changes in services, terms, or regulatory compliance.

A well-maintained website helps establish credibility, transparency, and trust with clients while complying with regulatory standards.

Why Choose Learnyst for Your SEBI-Compliant Trading Academy?

  1. Integrated KYC Verification: Simplify the onboarding process with built-in PAN card authentication, ensuring compliance with SEBI's Know Your Customer (KYC) regulations. This feature facilitates accurate record-keeping and a seamless enrollment experience for learners.

  2. Legally Compliant e-Signatures: Utilize Aadhaar-based e-signatures to manage digital agreements securely. This functionality streamlines consent management, aligning with SEBI's mandates for legally valid terms and conditions.

  3. Flexible Fee Management: Navigate SEBI's fee limitations by creating multiple pricing plans. Learnyst allows you to set up diverse payment options, adhering to the ₹1.5 lakh per annum cap for individual or family enrollments.

  4. Robust Course Creation Tools: Develop and deliver comprehensive courses using Learnyst's intuitive course builder, which supports various content formats, including videos, PDFs, and quizzes. This versatility enables RAs to provide high-quality, engaging educational content.

  5. Secure Content Delivery: Protect your intellectual property with DRM encryption and screen capture restrictions, ensuring that your course materials remain exclusive to enrolled learners and safeguarding against unauthorized distribution.

  6. Comprehensive Learner Management: Efficiently manage student enrollments, track progress, and engage with learners through integrated communication tools, fostering a collaborative and interactive learning environment.

  7. Analytics and Reporting: Gain valuable insights into learner performance and course effectiveness with detailed analytics, enabling continuous improvement and informed decision-making.

By choosing Learnyst, Research Analysts can confidently launch and manage a SEBI-compliant online academy, focusing on delivering exceptional financial education while the platform handles compliance and operational complexities.

Conclusion

As SEBI's new guidelines make the financial advisory space more transparent and regulated, it’s essential for research analysts and investment advisers to stay compliant while offering quality education. Learnyst's SEBI-compliant LMS platform provides the perfect solution, streamlining Website building, KYC processes, digital agreements, and fee management, so you can focus on delivering exceptional trading education. Whether you're launching a new trading academy or enhancing an existing one, Learnyst offers secure, flexible, and user-friendly tools to help you thrive in the new regulatory environment. Start your free trial today and ensure your academy is both compliant and efficient!

Frequently Asked Questions (FAQs):

  1. What are the recent changes introduced by SEBI for Research Analysts?
    SEBI has implemented new guidelines to enhance transparency and accountability among Research Analysts. These include stricter compliance measures, mandatory disclosures, and updated fee structures.

  2. How can Research Analysts ensure compliance with SEBI's new guidelines?
    RAs should stay informed about the latest regulations, maintain accurate records, provide clear disclosures to clients, and consider using SEBI-compliant platforms like Learnyst for their educational services.

  3. Why is it important for RAs to adhere to SEBI's guidelines?
    Compliance ensures the integrity of financial research, builds client trust, and protects analysts from legal repercussions. It also contributes to the overall stability and transparency of the financial market.

Tags:

Leave your thought here