The Hindu : Business : Tough norms proposed for equity analysts

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Tuesday, Apr 01, 2008
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Tough norms proposed for equity analysts

MUMBAI: Concerned over the way the market analysts are influencing share prices, the Securities and Exchange Board of India on Monday proposed to ban equity researchers from buying and selling shares of the company concerned 30 days before and five days after publication of the research report.

SEBI wants broking firms to maintain Chinese wall among their various activities like proprietary trading, investment banking and research.

“Trading members shall ensure that no research analysts may purchase or sell any security issued by a company that the research analyst follows or derivative of such securities, for a period beginning 30 calendar days before and five calendar days after the publication of a research report concerning the company,” SEBI said in its draft guidelines.

Draft guidelines

The market watchdog has chalked out draft guidelines on improving sales practice by exchange members and has invited comments from the public by April 15.

The draft also mandates the brokers to ensure that “no research analysts may purchase or sell any security or derivatives of such security in a manner inconsistent with the research analyst’s recommendations as reflected in the most recent research published by the member.”

It also prohibits brokers from offering favourable research or a specific price target to a company as consideration for the business.

Under the proposed norms, the brokers would also be required to fully disclose their and research analysts’ business interest in the company concerned. — PTI

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