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NISM Certifications · NISM-Series-XV: Research Analyst · Legal and Regulatory Environment (NISM XV)

A registered research analyst, Mr. Iyer, is about to publish a report on a listed company. Which of the following would clearly breach the regulatory requirements?

Trading in the company's shares before publishing his report, using knowledge of the recommendation, breaches the rules because it is front running and a conflict of interest. Disclosing holdings, compliance review and stating the rationale are proper practices.

  1. ATrading in the company's shares ahead of publication of his report, using knowledge of its recommendationCorrect
  2. BDisclosing his holding of 1% in the company in the report
  3. CHaving his report reviewed by a compliance officer
  4. DStating the rationale and valuation method used

Explanation

Trading ahead of the publication of a report (front running) is prohibited and also violates the PFUTP rules. Disclosing holdings, compliance review and stating rationale are required good practices, so they are not breaches.

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