I recently got myself registered as a Individual/Independent Research Analyst with SEBI. When I was going thru the process, available help was limited and anxiety very high, hence this thread.
I will write on the process, the questions, the remedies, the timelines and other topics as I think aloud. Instead of writing everything in one post, I will create individual posts for each topic, making it easier to read and search.
Will request other Research Analysts to participate and help create a good resource for budding RAs.
What is a Research Analyst? How does it differ from an Investment Advisor? Why does SEBI registration matter?
The key difference between a Research Analyst and an Investment Advisor is the ability to offer “personalized” advice. Research Analysts cannot, IAs can.
Personalized advice is based on financial planning which in turn requires deep understanding of clients financial situation, their goals, income expenses, income sources, etc. Investment Advisers hence have a higher connect with the Client. Deciding how much should one invest in Equities vs debt vs other financial instruments is a part of IA’s deliverables. IAs can also recommend stocks mutual funds and other instruments. IAs are not distributors and hence do not benefit from the actual transaction. They are allowed to charge fixed fee or fee based on the AUM. There are some recent changes in the fee structure which I am not aware of in details. (Can an IA help here?)
Research Analyst cannot offer individual personalized advice. RA’s job is to analyze and publish his/her analysis. Publishing of analysis can be in the form of research report of recommendations (model portfolio). It is an advice and hence not binding on the client to act on it. The key skill of the RA is research, it can be technical research, fundamental based research, or something like what I do i.e. quantitative research. Essentially, the RA’s make money on making this research available to their customers. Since they cannot have different research for different clients, they cannot offer individual advice.
They can however create multiple products based on their research, like different kinds of portfolios, or short term vs long term recommendations, etc. All subscribers to a certain service/product should be treated exactly same i.e. the recommendations/opinions should be circulated simultaneously.
SEBI registration is mandatory by law for both IA and RA. A SEBI registered advisor is not expected to be correct all the time, rather, he/she has the Fiduciary responsibility where they are required to put the client’s interest above everything, including their own interests.
What about Financial Planners? – Any financial planner should mandatorily be certified as an IA.
What is the process to get registered as a RA for Individuals? What are the various online resources available?
SEBI has made the process of registering as a RA very straight forward. All interaction happens thru their online portal or thru emails.
Here is the process in brief, we will cover some topics in detail later:
The application needs to be submitted online on the SEBI Intermediary Portal (called as SIP)
You first need to create your login using the “Self Registration” menu and pay the initial registration fees.
Once you get the login details, you can create apply for registration. The form looks daunting but is very straight forward. You can save and return later, so no need to complete the form in one sitting. I will cover the list of documents required in the next post.
Once the application is submitted, SEBI will review it. If they need more information, they will email it to you giving you 15 day period to respond with additional information or documents.
If you meet the eligibility and the SEBI is assured of your ability to offer advice, you can expect the application to be approved in 6-8 weeks time.
Online resources: (Please go thru all of these in detail)
Who should register as RA? What are the benefits?
This topic has been discussed a lot on this forum and outside. The crux is simple, if you plan to offer your research (recommendations) and charge for it, you should get registered by Law. Consider this a a license.
SEBI registration gives you the validity to do your advisory business. The process guides you in detail as to what your role is and more importantly what your responsibilities are.
Advice is a business based on trust. I believe, once your name appears on the SEBI website as a registered research analyst, your customers also feel confident about your abilities and knowledge.
The detailed eligibility criteria is available in the SEBI RA Regulations (2014) on the SEBI website. In a nutshell:
- MBA in finance OR
2 Graduate + Post Graduate Diploma in Finance or Capital Markets OR
- Graduate + 5 Years of relevant experience.
NOTE: I am a mechanical engineer, so I had to do my PGD to be eligible. I did my Post Graduate Diploma in Financial Markets Practice from IGNOU (long distance learning).
- NISM Series (XV) Research Analyst
- Net Worth greater than 1 lakh Rs. for Individuals (as verified by a CA issued certificate)
Income Tax Returns
- Last 3 years of income tax returns filed (ITR acknowledgements)
- Basic office setup with communication (internet/telephone/etc.) facilities, software & hardware.
NOTE: Your home can be your office.
Your only job/Full-time
- SEBI expects you to be a RA full-time, i.e. it should be your only job. This brings in a seriousness to the whole advisory business. I was specifically asked this question considering my IT background.
NOTE: This might not be mentioned any where in the official documentation, but I do feel this is a de facto eligibility criteria.
Here is the list of documentation required:
NOTE: All documents should be self-attested. In simple English, you need to photo-copy, sign and then scan before uploading to the website.
Upload each document separately, DO NOT combine in to one PDF. I was asked to resend the documents separately.
ID & Address
- Ration Card (i was asked to submit this, may not be required for all)
- School Leaving Certificate( again, I was asked for this, may not be required for all)
- Education (Graduation & Post Graduation)
- Experience Certificate (if applicable)
- Net Worth Certificate from a CA
- 3 Years ITR
- NISM Exam Pass Certificate
- Declaration of Compliance with Relevant Clauses of Chapter of III of the Regulations
- Declaration of Compliance with Schedule II of SEBI Regulations (specifying the 4 criteria)
- Declaration of Compliance with Regulation 7 (1) of Research Analysts Regulations 2014
- Declaration of Compliance with Regulation 7 (2) of Research Analysts Regulations 2014
- Declaration of Availability of Necessary Infrastructure
- Ownership/rental agreement for Office space
- Any other proof of ownership of software (like CaptaLine, Ace Equity, etc) and Hardware, domain ownership, etc.
Business Related Documents
THIS IS A CRITIAL SECTION
1. Business Activities & Plan - Include planned service offerings, how will you charge for these services, how the services will be offered, target customers, your business plan, etc. Include as much details to convince SEBI that you have a definite plan in place. You can include your future plans as well. Include your plans of owning a website or an application, Customer communication plan, etc.
2. Research Activities - How will you perform your research? What activities will you do as a part of research? What kind of information will your research report contain? What data will you use, how will you source it? Again, include as much details as required to show that you know what you are going to do. Write your investment philosophy here.
NOTE: Research report is a used as a common term to indicate report, recommendations, opinions, targets, etc. You need not always create a “report” per say. A model portfolio is also a research report. You need not even have a target for every recommendation.
3. Standard Disclosure & Disclaimer - With every research report, you will need to communicate this to your customers. You can search the website of any research analysts to get a sample. Ensure that you customize it for your service
4. Internal Policy Document - This needs to be prominently available on your website and to all your employees. Again, search for other RA website to get a sample.
Do spend good amount of time in writing these documents. These will guide you when you actually start your business. They are not just meant for SEBI, these actually help you create definite structure for your business.
How does the process unfold in reality?
Once you submit all the documents and the application, SEBI took 3 weeks to respond. So 3-5 weeks should be considered a normal response time for the initial response. Post that for any queries raised by SEBI followed by your response, the schedule will lengthen accordingly. SEBI will take typically 3 weeks to respond after your submission. The best way to shorten the cycle is to be prepared will all the documents well.
Physical Document Submission:
This step is no longer required. All interaction is through email or SIP.
How is SEBI’s approach?
Based on my experience, SEBI is focused on ensuring that only serious, qualified persons are registered. Your intent and plans are communicated through your documentation. As long as you do a good job there, you would be cleared asap.
Any other tips or tricks?
How can any stock market related discussion end without tips?
- The SIP portal is slow. OTPs do not always arrive on time. It is a bit of a struggle, but nothing that need to worry you.
- All payments are done online.
- Once the registration document is submitted online, you cannot edit it.
- The form needs to be filled serially. You cannot skip pages and return back.
I will add as I remember or get questions.
Thanks for the detailed explaination.
I wanted to understand whether I will be eligible.
My qualifications are: B.Tech and M.Tech from IIT Kharagpur in Industrial Engineering; Micro Specialization in Entreprenership and Innovation; CFA L2 cleared; Will sit for CFA L3 in May 2021.
On your graduate and post graduate degrees, you do not quality. The PG degree has to be in Finance or Capital markets.
Once you clear CFA and assuming CFA is recognized degree by UGC or some other Government body, you should qualify. The regulations read as follows:
(i) A professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, financial services or markets provided by:
(a) a university which is recognized by University Grants Commission or by any other commission/council/board/body established under an Act of Parliament in India for the purpose; or
(b) an institute/association affiliated with such university; or
© an institute/ association/university established by the central government or state government; or
(d) autonomous institute falling under administrative control of Government of India; or
(ii) professional qualification or post-graduate degree or post graduate diploma which is accredited by All Indian Council for Technical Education, National Assessment and Accreditation Council or National Board of Accreditation or any other council/board/body set up under an Act of Parliament in India for the purpose;
If you still have the doubt, I will suggest you drop an email directly to SEBI. Search for IMD in SEBI directory on its website (to get their email/phone), and write to anyone from the IMD team. The IMD team handles the Research Analysts registration.
Thanks for starting this thread.
I am in the same boat (Engineer looking for a course to fulfill eligibility criteria).
Looks like I need to complete the IGNOU course and then I would fulfill criteria.
Would you mind interacting over DM so that I can have some guidance on getting this course done.?
Absolutely Chetan, that’s the reason I initiated this thread.
At the same time, I will prefer answering queries on the public forum (will keep the person asking the question anonymous, if they want).
Thank you Ashish for the detailed post. Please could you elaborate on the process for Investment Advisor as well, if you’re familiar with it.
I am not aware of the process for IA registration.
Thanks for your reply Ashish.
Looks like the IGNOU website is down since 2 days.
Not able to have a detailed look and apply the course.
Did that ever happen with you ?
Will ask for your guidance once I do some self research in interest of your time.
I applied offline for the PGFMP course. You can try that. Visit their office and submit the form. With IGNOU, the saying “Bhagwan (IGNOU) ke ghar der hai, andher nahi” is very appt!! You need a lot of patience, but if you do the course seriously, you learn a lot.
You can also check for the course details here: https://ignoutv.in/ignou-pgdfmp-syllabus/
Having done reasonably well for myself in markets over last 12 years, I am not worried about the syllabus to be honest.
This course how it works out process wise is more of my concern honestly.
There is a way to get eligible is a big revelation to me & all thanks to you Ashish.
I will sure be connected to you about the process for IGNOU.
Would a Masters of Science in Finance be considered relevant in this eligibility criteria?
What exactly is Master of Science in Finance? It will be accepted if the degree is equivalent to Post Graduate Degree/Diploma in Finance from a recognized Indian university.
It’s normally called Msc Finance, accredited postgraduate course by the university of Mumbai
Hello sir , I need to know about the documents we need to maintain for audit purpose which documents i need to maintain as i want to start giving recommendation as I am a technical analyst and how to maintain them like record maintenance what If I give my trading calls on telegram how should I maintain the record and other documents