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SEBI Issues Comprehensive Master Circular for Research Analysts to Streamline Regulations


The Securities and Exchange Board of India (‘SEBI’) issued a master circular for research analysts (‘RAs’)[i]. This master circular, issued in the exercise of powers conferred under s. 11(1) of the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) serves a crucial purpose. It aims to streamline processes, protect the interests of investors, and promote and regulate the securities market development. The master circular is a comprehensive compilation of all existing circulars, guidelines, and advisory notes issued by SEBI to RAs, providing market participants with easy access to relevant regulatory information in one consolidated document.

The master circular incorporates provisions from various SEBI circulars and advisories issued to RAs until 15.05.2024. These provisions encompass guidelines on research practices, disclosures, reporting requirements, and compliance standards that RAs are required to adhere to.

Before delving into the master circular framework, it is imperative to understand the background leading to the prudent framework and its enactment.


Who are RAs, and what are their functions?

RAs, as professionals, play a crucial role in the financial market. Their responsibilities include gathering and analysing the content of their research report and providing recommendations to their clients on various aspects of financial markets, industries, companies, etc. Their primary role is to research specific topics or sectors, evaluate market trends, assess the performance and prospects of companies, and make recommendations to investors, fund managers, or other stakeholders.

Guidelines for Master Circular for RAs can be summarised as follows:

  1. Procedural Guidelines for proxy advisors (‘PAs’)—As per reg. 24(2) r/w reg. 23(1) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014 (‘Regulations’), PAs are required to follow the code of conduct and comply with the following procedural guidelines. a)  The PAs shall formulate the voting recommendation policies and disclose their updates to their clients. b) PAs will share their research methodology with their clients. c) The PAs shall draw their client’s attention to any factual errors within 24 hours of receipt of the information. d) The PAs shall share their report with their client and the company. e) The PAs shall disclose their recommendations, the legal requirements, and the reasoning behind them. f) The PAs shall disclose any conflicts of interest and establish procedures to manage or minimise such conflicts.

  2. Administration and Supervision of RAs - It ascribes the framework for the administration and supervision of RAs and investment advisers (‘IAs’). A recognised stock exchange (‘SE’) oversees administration and supervision activities. Under reg. 14 of the RA and IA Regulations, the SE will be recognised as Research Analyst Administration and Supervisory Body (‘RAASB’) and Investment Advisor Administration and Supervisory Body (‘IAASB’).

  3. Grievance resolution between listed entities and PAs, which imposes an obligation on listed entities primarily to protect and facilitate the exercise of shareholders' rights.

  4. Redressal of IA's grievances through the SEBI Complaints Redress System (‘SCORES’) platform and Online Dispute Resolution (‘ODR’). SEBI has taken several steps for redressal and to create awareness among investors about grievances through workshops and print and electronic media.

  5. SEBI has introduced an Investor Charter for RAs to protect investor awareness of several activities in which investors deal while availing of the services provided by RAs. To enhance transparency in grievance redressal, RAs shall disclose all complaints on their website or mobile application in the format mentioned in Annexure B.

  6. The Ministry of Electronics & Information Technology (‘MEITy’) informed SEBI that financial sector institutions are availing or thinking of availing of Software as a Service (‘SaaS’) to manage their governance, risk and compliance function to enhance their cyber security posture. In this regard, the Computer Emergency Response Team (‘CERT’) issued an advisory for the financial sector organisations and forwarded it to the SEBI. The advisory can be viewed in Annexure C of the master circular.

  7. The procedure for seeking prior approval for a change in control is provided under reg. 24(3) of the Regulation. The RAs must get prior approval from SEBI in case of a change in control, and the regulation also talks about how a sanction must be taken from the National Company Law Tribunal in terms of the provisions of the Companies Act, 2013.

  8. RAs shall ensure compliance with the advertisement code, which includes (i) all forms of communication issued by or on behalf of RAs that influence investment decisions of investor or prospective investors, (ii) Information/disclosures in the advertisement, (iii) prohibitions in the advertisement (iv) other compliances/requirements.

  9. The unauthenticated news circulated by SEBI-registered market intermediaries through various modes of communication

  10. Guidelines on outsourcing activities by intermediaries, and intermediaries shall consistently deliver high standards of service, exercise due diligence and ensure proper care in their operations to reduce costs and, at times, for strategic reasons. Risks associated with outsourcing may be operational risk, reputational risk, legal risk, country risk, strategic risk, exit-strategy risk, counter-party risk, concentration and systemic risk.

  11. Point 11 ascribes the framework for a regulatory sandbox, with the objective of granting certain facilities and flexibilities to SEBI-regulated entities so that they can experiment with FINTech solutions.

  12. General guidelines for dealing with conflicts of interest of intermediaries and their associated persons in the securities market, and all intermediaries shall adhere to these guidelines for avoiding, dealing with or managing conflicts of interest. They shall also be responsible for educating their associated persons for compliance with these guidelines. Intermediaries and their associates shall lay down with active involvement of senior management, policies and internal procedures to identify and deal with or manage actual or potential conflicts of interest.

  13. The RAs are advised to make a note of the date which is provided by the various data sources in the Indian securities market, and such data should be made available to users, ‘free of charge’ both for ‘viewing’ the data,

  14. It states that the RAs are advised to refer to certain circulars (‘Master Circular issued on 03.02.2023’, ‘Circular no. SEBI/HO/MIRSD/MIRSDSECFATF/P/CIR/2023/091 dated 16.06.2023, and “Circular no. SEBI/HO/MIRSD/SEC-FATF/P/CIR/2023/0170 dated 13.10.2023’) with respect to ‘Guidelines on Anti-Money Laundering (‘AML’) Standards and Combating the Financing of Terrorism (‘CFT’) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under’.


With the issuance of the updated master circular, SEBI reaffirms its pivotal role as the regulatory authority overseeing the securities market in India. This comprehensive document integrates all prior circulars, guidelines, and advisories, significantly enhancing accessibility and understanding for market participants. Stakeholders are encouraged to thoroughly review the master circular to ensure adherence to the latest regulatory requirements and to remain abreast of developments impacting the securities market. This update not only clarifies the contents and significance of the master circular but also reflects SEBI’s continued commitment to strengthening the regulatory framework and bolstering investor confidence in the Indian securities market.




End Note

[i] SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/49 dated 21.05.2024.

Authored by Manmohan Bhola, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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