NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

Regulatory Requirements and Compliance in Research Reports

Updated 11 October 2026 · Fact-checked

Under the SEBI (Research Analysts) Regulations, 2014, a research report must be fair, balanced and not misleading. It must disclose conflicts of interest, holdings, compensation and relationships with the subject company, and keep fact separate from opinion. NISM questions test what must be disclosed and which practices are prohibited.

Understand Regulatory Requirements and Compliance in Reports

A research report influences how investors spend money. So SEBI treats it as a regulated product. The rules aim at one thing: the reader must be able to judge whether the analyst can be trusted and whether the report is honest.

There are three ideas to hold. Disclosure: tell the reader about anything that could bias the view. Fair presentation: show facts accurately, give a balanced picture and do not hide risks. No misleading content: no false claims, no guarantees of returns, no exaggeration.

A conflict of interest exists when the analyst, the firm or their associates have a financial or other interest that could affect the recommendation. Examples are holding the stock, being paid by the company, acting as its merchant banker or having a relative serving as an officer of it. The rule is not that conflicts are banned. The rule is that they must be disclosed, and managed so that the analyst's independence is not compromised.

A fact can be checked against a source, such as reported revenue or a published ratio. An opinion is a judgement, such as a target price, a forecast or a view that a stock is undervalued. A good report labels the source of facts, states the assumptions behind opinions and never presents a forecast as certain.

The exact wording of clauses and time limits should be taken from the NISM workbook. Learn the principle behind each rule. Most exam options can then be eliminated by asking: does this hide a conflict, mislead the reader, or blur fact and opinion?

Key formulas to remember

Core test of a compliant report: Compliant report = full disclosure + fair and balanced presentation + no misleading content; If an option fails any one of the three, it is usually the wrong answer.
Disclosure principle: Conflict exists → disclose it (and manage it); Disclosure is the usual requirement. Conflicts are not automatically banned.
Items typically disclosed: Analyst or associate holdings in the subject company + compensation received from it + other relationships (such as investment banking) + whether the analyst is an officer or has a relative who is; Check the workbook for exact thresholds and wording.
Fact vs opinion: Fact = verifiable and sourced; Opinion = judgement, forecast, target price with stated assumptions; Reports must not present opinion as fact.
Prohibited content: No guaranteed returns, no false or exaggerated claims, no omission of material risk; Misleading by omission is still misleading.

How to solve Regulatory Requirements and Compliance in Reports questions

Use this method for any question on compliance and disclosure in reports.

1Read the question and identify what is being tested: disclosure, conflict of interest, fair presentation or misleading content.
2Identify the facts given: who holds what, who pays whom, what the report says.
3Ask whether a conflict or interest exists that could bias the view.
4If it exists, check whether the report discloses it clearly. Disclosure is usually the required action.
5Check whether facts are accurate and sourced, and whether opinions and assumptions are labelled as such.
6Look for red-flag words in options such as guaranteed, certain, risk-free or no need to disclose.
7Pick the option that is honest, complete and balanced. Eliminate the rest.

Quickest way: Three-filter elimination

When to use it: Use when time is short and options look similar.

Filter 1: Does the option hide or skip a conflict? Reject it.
Filter 2: Does it promise or guarantee returns, or hide risk? Reject it.
Filter 3: Does it present an opinion or forecast as fact? Reject it.
Choose the option that remains. It is usually the one with disclosure and balance.

Common mistakes in Regulatory Requirements and Compliance in Reports

Thinking a conflict of interest means the analyst cannot publish a report.
The word conflict sounds like a ban.
Fix: Remember that the usual rule is to disclose and manage the conflict. Banning applies only where the regulations specifically say so.
Treating a target price as a fact.
Numbers look precise and objective.
Fix: A target price depends on assumptions and is an opinion. Facts are verifiable historical or reported data.
Believing disclosure is needed only for the analyst's own holdings.
Students focus on the personal angle.
Fix: Also recall compensation, relationships with the company, associates' and relatives' interests, and the firm's business links.
Thinking a report is fine if every statement in it is individually true.
Students ignore omission.
Fix: A report that leaves out material risks or presents only one side can still be misleading and unfair.
Accepting a disclaimer as a substitute for disclosure.
A generic line at the end looks like compliance.
Fix: Disclosure must be specific and clear. A vague disclaimer does not cure an undisclosed conflict.

Worked examples

Example 1

A research analyst's report recommends Buy on a company. The analyst's firm earned fees from the same company for another service during the year, but the report says nothing about it. What is the compliance issue, and what should the report have done?

Show the solution

Identify the topic: conflict of interest and disclosure.
The firm received compensation from the subject company, which could bias the view.
The conflict itself is not necessarily prohibited.
The failure is non-disclosure: the reader cannot judge possible bias.
The report should have disclosed the relationship and compensation clearly, and the firm should manage the conflict.

Answer: The issue is non-disclosure of a conflict of interest. The report should have disclosed the fee relationship clearly.

Example 2

Which of the following statements in a report is an opinion rather than a fact? (A) The company reported revenue of ₹1,200 crore for the year. (B) The company has 14 manufacturing plants. (C) The stock is undervalued and should reach ₹850 in twelve months. (D) The company's promoter holding was 52% at the quarter end.

Show the solution

A fact can be verified from a reported or published source.
Option A is reported financial data, so it is a fact.
Option B is a countable and verifiable detail, so it is a fact.
Option D is a disclosed shareholding figure, so it is a fact.
Option C is a judgement and a forecast that depends on assumptions, so it is an opinion.

Answer: Option C is the opinion.

Exam tips

Look for the word disclose in options. It is often the correct action when a conflict exists.
Reject options with guaranteed, assured or risk-free returns. They are always misleading.
In fact-vs-opinion questions, ask whether the statement can be checked against a source.
Do not guess on 1-mark questions without thought. NISM-Series-XV has negative marking of 25% of the marks for each question, so eliminate before choosing.
Take exact clause wording and any limits from the NISM workbook and SEBI regulations, not from memory of other series.

Practice questions from Qualities of a Good Research Report

Regulatory Requirements and Compliance in Reports: frequently asked questions

What must a research report disclose under SEBI rules?

It must disclose interests that could bias the view. These include holdings, compensation and other relationships between the analyst, their associates or the firm and the subject company. Check the workbook for the exact list.

Is a conflict of interest allowed for a research analyst?

Conflicts can exist, but they must be disclosed and managed so that independence is not compromised. Hiding a conflict is a breach. Some specific situations may be restricted by the regulations.

What is the difference between fact and opinion in a research report?

A fact can be verified, such as reported revenue. An opinion is a judgement, such as a forecast or target price. A good report separates them and states the assumptions behind opinions.

Can a research report guarantee returns?

No. Guaranteeing or assuring returns is misleading. A report must present risks fairly and avoid exaggerated or false claims.