SEBI Proposes a New Entity RAASB to Administer and Supervise RAs

In a significant move aimed at strengthening regulatory oversight within the capital markets, the Securities and Exchange Board of India (SEBI) has put forth a proposal to establish a new entity, the Research Analyst Administration and Supervisory Body (RAASB). This visionary initiative is geared towards efficiently managing and overseeing research analysts (RAs) operating within the financial landscape.

Addressing Financial Implications for Research Analysts

SEBI’s consultation paper emphasises that the envisioned RAASB should function without imposing undue financial burden on research analysts. Acknowledging the role of research analysts in providing valuable insights to market participants, the paper proposes a reassessment of the application and registration fees currently prescribed by the existing RA Regulations. This aims to render the process more economically viable and encouraging for both established and emerging research analysts.

Elevating Eligibility Evaluation Through Membership

An intriguing recommendation in the proposal is the inclusion of membership in RAASB as a prerequisite for the assessment of eligibility when granting a registration certificate to a research analyst. By introducing this criterion, SEBI intends to elevate the standards of research analysis and ensure that those entering the field are aligned with the best practices and regulations upheld by the oversight body.

Embracing a Proven Model: IAASB Parallels

Given the ever-evolving nature of the research analyst business, the proposal draws inspiration from successful models such as the International Auditing and Assurance Standards Board (IAASB). In line with this inspiration, the proposal envisions the creation of the Research Analyst Administration and Supervisory Body, mirroring the IAASB’s role in auditing and assurance standards. This strategic step would effectively expand the regulatory framework governing research analysts, drawing a parallel to the approach employed for Investment Advisers (IAs), as articulated in the consultation paper.

Learning from IAASB Recognition

SEBI’s prior experience with the Investment Adviser Administration and Supervisory Body (IAASB) sets a precedent for the proposed RAASB. The IAASB, tasked with overseeing and administering investment advisers, was granted recognition following a thorough evaluation of eligible stock exchanges. The recognition was awarded to BSE Administration & Supervision Ltd (BASL), a subsidiary of the Bombay Stock Exchange (BSE), for a duration of three years, commencing from June 202.

In essence, SEBI’s proposition to establish the Research Analyst Administration and Supervisory Body signifies a proactive step towards enhancing the oversight and management of research analysts in the capital markets. By considering financial implications, introducing membership prerequisites, and drawing from successful models like IAASB, this proposal holds the promise of fostering a more robust and accountable ecosystem for research analysis in India.