The Bombay Chartered Accountants’ Society (BCAS) has written to Securities and Exchange Board of India (SEBI) raising several regulatory and practical difficulties faced by applicants seeking registration as research analysts, and has sought clarifications and procedural changes to streamline the process.
The CA’s body said prospective applicants are facing challenges ranging from delays in application processing to interpretational issues around eligibility and permitted activities under the SEBI (Research Analysts) Regulations, 2014.
One of the key concerns raised is the absence of a structured framework for individuals registered as research analysts to transition into corporate or LLP structures. BCAS said the current system requires fresh registration and surrender of the earlier licence without any transition window, which can disrupt services to existing clients and create operational difficulties.
Advisers framework
The body has suggested a mechanism similar to the one available under the investment advisers framework, where applicants can obtain in-principle approval while continuing to service clients during the transition period.
BCAS has also sought clarification on restrictions relating to “other employment” of the principal officer of a research analyst entity. According to the representation, applications are being rejected in cases where the proposed principal officer holds directorships or partnership interests in other entities. The society said that the regulations do not explicitly prohibit such positions, particularly when they are non-executive in nature.
Another issue raised relates to delays in processing applications after the responsibility for administration of research analyst registrations was delegated to BSE. BCAS said the process now involves scrutiny by both BSE and SEBI, which has lengthened timelines compared with earlier when the regulator handled registrations directly.
The representation also sought clarity on whether a single individual can act as principal officer for the research analyst division as well as other divisions within the same entity, stating that the current interpretation by the exchange appears inconsistent with the regulatory framework.
Investor training
BCAS further sought guidance on whether investor training programmes using live market data and providers of so-called “black box” algorithmic strategies should fall within the scope of research analyst activities.
In addition, the body has requested SEBI to clarify whether authorised persons of stock brokers and entities whose directors are registered mutual fund distributors can obtain research analyst registration, provided conflict-of-interest safeguards are in place.
It has also asked the regulator to confirm whether a chief executive officer of a non-individual entity can be appointed as principal officer where the individual has overall responsibility for the business.