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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

A broker provides research services to clients and also operates as a registered research analyst. Which arrangement is consistent with SEBI's requirements?

A broker doing research must be registered as a research analyst, keep that activity separate from broking, and disclose conflicts of interest and holdings in reports. Exemption from registration or trading ahead of publication would violate SEBI rules.

  1. AResearch analyst activity be conducted with separation from the broking business, with disclosures of conflicts of interest in research reportsCorrect
  2. BResearch reports may omit disclosure of the broker's holdings in the covered company
  3. CResearch analyst activity requires no registration if done by a broker
  4. DAnalysts may trade in the securities they cover just before publishing a report

Explanation

Research analyst regulations require registration, disclosure of conflicts and holdings, and restrictions on trading around reports. A broker is not exempt, and trading before publication would be front running. Hence only the arrangement with separation and disclosures is correct.

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