SEBI’s New Guidelines: Stricter compliance rules for research analysts (RAs) aim to curb fraudulent stock recommendations and illegal practices.
Increased Operational Costs: Smaller equity research firms face higher costs due to compliance audits, KYC procedures, and record-keeping requirements.
Firms Shutting Down: Sentinel Research, Stalwart Advisors, and Mystic Wealth are among firms closing due to the regulatory burden.
Quarterly Fee Model: New rules mandate quarterly fee collection, disrupting firms that traditionally charged annual fees.
Impact on Retail Investors: Independent research firms catering to retail investors struggle to meet compliance demands.
Expert Criticism: Market experts argue the regulations are too stringent and may reduce the quality of research in the market.
Fraudulent Advisors Targeted: SEBI aims to eliminate unscrupulous advisors exploiting retail investors with fake stock tips.
Unintended Consequences: Legitimate research firms are disproportionately affected, while fraudulent entities may continue operating.
Compliance Challenges: Firms must now focus on short-term returns, conflicting with long-term investment strategies.
Future of Equity Research: The new regulations may reshape the industry, favoring larger firms over smaller, independent operators.