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

A SEBI-registered research analyst is about to publish a research report on a listed company. Which of the following disclosures is consistent with the regulatory requirement on conflict of interest?

The report must disclose whether the analyst or associates have financial interest or beneficial ownership in the subject company's securities. This lets readers judge objectivity. There is no 50% threshold, and disclosure to SEBI alone does not satisfy the requirement towards clients.

  1. ADisclosing whether the analyst or associates hold financial interest or beneficial ownership in the subject company's securitiesCorrect
  2. BDisclosing only the target price and omitting holdings, since holdings are confidential
  3. CDisclosing holdings only if they exceed 50% of the company's equity
  4. DDisclosing holdings only to SEBI and not to the readers of the report

Explanation

The regulations require disclosure of financial interest, beneficial ownership, and other conflicts in the report or public appearance so that clients can judge objectivity. Options setting a 50% threshold, confidentiality or disclosure only to SEBI are not what the regulations require.

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