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NISM Certifications · NISM-Series-XV: Research Analyst · Introduction to Research Analyst Profession

Analyst Meera, registered under the Regulations as an individual research analyst, hears that her employer plans to publish a report on Sundaram Textiles Ltd next week. She has a trading account. Which course of action is consistent with the Regulations and the code of conduct?

Meera should not trade in the stock during the restricted window around preparation and publication of the report and should disclose her holdings. Trading ahead of publication, or having a relative trade on her behalf, breaches the Regulations and the code of conduct; restrictions bind individual analysts as well as firms.

  1. ANot trade in the stock during the period when a report is being prepared and for a period before and after its publication as per the Regulations, and disclose holdingsCorrect
  2. BBuy the shares immediately since the report is positive and her trade will not affect the price
  3. CAsk a relative to buy the shares in the relative's name to avoid disclosure
  4. DTrade freely because only the firm, not the individual, is bound by trading restrictions

Explanation

The Regulations restrict analysts from trading in securities they cover around the time of the report and require disclosure of holdings. Using a relative to evade rules or ignoring restrictions breaches the code of conduct and is front-running in spirit.

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