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

Which of the following statements about a research analyst's dealings in securities that he covers is consistent with the SEBI (Research Analysts) Regulations, 2014?

A research analyst cannot trade in a security he covers during the period of 30 days before and 5 days after publishing the report, and must not trade contrary to his recommendation. This prevents front-running and conflicts of interest, so unrestricted or opposite trades are not permitted.

  1. AThe analyst may trade freely in the securities before publishing the report
  2. BThe analyst must not deal or trade in securities for which he has issued a recommendation within 30 days before and 5 days after the publication of the reportCorrect
  3. CThe analyst may trade in the opposite direction of the recommendation within 5 days of publication
  4. DTrading restrictions apply only to the analyst's clients and not to the analyst

Explanation

The Regulations restrict a research analyst from trading in the securities covered within 30 days before and 5 days after publication of the report, and bar trades contrary to the recommendation. Free trading, opposite trades and client-only restrictions are all incorrect.

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