SEBI looks at more big bang reforms, review proposal to unbundle analyst research fees from broking fees

Market regulator SEBI is likely to review its proposal to unbundle analyst research fees from broking fees, as feedback from stakeholders has indicated that such a move in other markets has had only a limited impact.

According to sources, the regulator could review this proposal and consider a different model for analyst fees. The SEBI Board is set to meet on December 17 when it will take up amendments to the Stock Broker Regulations, 1992.

“Independent research on buy and sell is important, especially on the sell side, as it is very essential for retail investors,” noted the source, adding that the aim was to ensure that investors understand what they are paying for and to bring greater accountability. However, mutual funds and broking firms have been concerned about the proposal that could impact their fees.

Meanwhile, SEBI is also reviewing the short selling norms as well as the Stock Lending and Borrowing Framework. The framework for stock lending and borrowing was introduced in 2007 and came into effect from 2008, but has not been reviewed and needs to be brought in sync with newer developments.

It has also prohibited mutual funds from investing in pre-IPO share placements but has allowed them to invest in anchor rounds. The move is aimed at boosting liquidity and enhancing transparency in the valuation of companies coming out with their initial share sale.