Unit study guide · NISM Series III-A
SEBI (Research Analyst) Regulations, 2014
3 questions in this unit
What this unit covers
- What must a research analyst seek to ensure about factual statements in a research report?
- A research analyst has a financial interest in the subject company. What disclosure issue must be addressed in the report?
- A research entity links an analyst’s bonus directly to winning a specific investment-banking transaction. The report contains a conflict disclaimer. Is this acceptable?
Key ideas
From the practice bank · 1
What must a research analyst seek to ensure about factual statements in a research report?
Factual statements should be based on reliable information, with recommendation terms defined and used consistently. Remember: Research facts need a reliable basis and clear terminology.
Hint Common mistake: Treating a confident tone or an issuer’s preference as evidence. Distinguish evidence supporting a fact from certainty about a future outcome.
III-A-130From the practice bank · 2
A research analyst has a financial interest in the subject company. What disclosure issue must be addressed in the report?
The required financial-interest disclosure must be made so readers can evaluate the potential conflict. Remember: A conflict disclosure lets readers assess interests that may affect research.
Hint Common mistake: Assuming objectivity claimed by the analyst removes the need for disclosure. Consider what a reader needs to assess a possible conflict.
III-A-131From the practice bank · 3
A research entity links an analyst’s bonus directly to winning a specific investment-banking transaction. The report contains a conflict disclaimer. Is this acceptable?
The arrangement is prohibited because regulation 17(1) restricts compensation based on a specific investment-banking or related transaction. Remember: Research independence includes how analysts are rewarded, not only what they disclose.
Hint Common mistake: Assuming a conflict disclaimer cures a prohibited incentive arrangement. Check the separate rule for compensation rather than relying only on report disclosure.
III-A-132