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TMI BlogMaster Circular for Research AnalystsX X X X Extracts X X X X X X X X Extracts X X X X ..... l be deemed to have been done or taken under the corresponding provisions of this Master Circular; b) Any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of this Master Circular; c) The previous operation of the rescinded circulars or anything duly done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the rescinded circulars, any penalty, incurred in respect of any violation committed against the rescinded circulars, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the rescinded circulars have never been rescinded. 5. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 6. This circular is available on SEBI website at www.sebi.gov.in . Yours faithfully Srishti Ambokar Deputy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement vis-a-vis higher standard they are suggesting if any, and the rationale behind the recommendation of higher standards. g) Proxy Advisors shall disclose conflict of interest on every specific document where they are giving their advice. Further, the disclosures should especially address possible areas of potential conflict and the safeguards that have been put in place to mitigate possible conflicts of interest. h) Proxy Advisors shall establish clear procedures to disclose, manage and/or mitigate any potential conflicts of interest resulting from other business activities including consulting services, if any, undertaken by them and disclose the same to clients. 1.2 The provisions of Clause 1.1(c) and 1.1(e) became applicable with effect from February 01, 2021.[ Reference: Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/157 dated August 27, 2020 and Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/256 dated December 31, 2020] All other provisions of clause 1.1 became applicable with effect from January 01, 2021.[ Reference: Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/157 dated August 27, 2020.] II. INVESTOR COMPLAINTS 2. Grievance Resolution between listed entities and proxy advise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rint and electronic media. 3.2. As an additional measure and for information of all investors who deal/ invest/ transact in the market, the research analysts shall prominently display in their offices the following information about the grievance redressal mechanism available to investors. Dear Investor, In case of any grievance / complaint against the research analyst: * Please contact Compliance Officer of the research analyst (Name and Address) / email-id ([email protected]) and Phone No. - 91- XXXXXXXXXX. * You may also approach CEO / Partner / Proprietor (Name) / email- id ([email protected]) and Phone No. - 91-XXXXXXXXXX. * If not satisfied with the response of the research analyst you can lodge your grievances with SEBI at http://scores.gov.in or you may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575. 3.3. Research analysts are also advised to refer to Master Circular reference no. SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated November 07, 2022 issued by SEBI on the redressal of investor grievances through the SEBI Complaints Redress System (SCORES) platform a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Technology, Govt. of India ('MEITy'), has informed SEBI that the financial sector institutions are availing or thinking of availing Software as a Service (Saas) based solution for managing their Governance, Risk & Compliance (GRC) functions so as to improve their cyber Security Posture. As observed by MEITy, though SaaS may provide ease of doing business and quick turnaround, but it may bring significant risk to health of financial sector as many a time risk and compliance data of the institution moves beyond the legal and jurisdictional boundary of India due to nature of shared cloud SaaS, thereby posing risk to the data safety and security. 5.2 In this regard, Indian Computer Emergency Response Team (CERT-in) has issued an advisory for Financial Sector organizations. The advisory has been forwarded to SEBI for bringing the same to the notice of financial sector organization. The advisory can be viewed at Annexure C. 5.3 It is advised to ensure complete protection and seamless control over the critical systems at your organizations by continuous monitoring through direct control and supervision protocol mechanisms while keeping the critical data within the legal bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized signatories that: (i) there will not be any change in the Board of Directors of incumbent, till the time prior approval is granted; (ii) pursuant to grant of prior approval by SEBI, the incumbent shall inform all the existing investors/ clients about the proposed change prior to effecting the same, in order to enable them to take informed decision regarding their continuance or otherwise with the new management; and (iii) the 'fit and proper person' criteria as specified in Schedule II of SEBI (Intermediaries) Regulations, 2008 are complied with. h. In case the incumbent is a registered stock broker, clearing member, depository participant, in addition to the above, it shall obtain approval/NOC from all the stock exchanges/clearing corporations/ depositories, where the incumbent is a member/depository participant and submit self-attested copy of the same to SEBI. iii) The prior approval granted by SEBI shall be valid for a period of six months from the date of such approval within which the applicant shall file application for fresh registration pursuant to change in control. 6.3 To streamline the process of providing approval to the proposed change in cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on pictures) or in any other manner whatsoever. b. Information/disclosures in the advertisement: The information/disclosures that the advertisement shall contain, include the following- i. Name of the RA as registered with SEBI, registered office address, SEBI Registration No., logo/brand name/trade name of RA, and CIN of the RA, if applicable. ii. Information which is accurate, true and complete in unambiguous and concise language. iii. Standard warning in legible fonts (minimum 10 font size) which states "Investment in securities market are subject to market risks. Read all the related documents carefully before investing.". No addition or deletion of words shall be made to/from the standard warning. iv. In audio-visual media based advertisements, the standard warning in visual media based advertisement and accompanying voice over reiteration shall be audible in a clear and understandable manner. For example, in standard warning both the visual and the voice over reiteration containing 20 words running for at least 10 seconds may be considered as clear and understandable. v. Whenever the advertisement is being issued in a language other than English, it will be ensu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to the client that the recommendation of research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance. xi. Any statement which directly or indirectly discredits other advertisements or intermediaries or makes unfair comparisons or ascribes any qualitative advantage over other intermediaries directly or indirectly. xii. Reference to past performance of the RA. xiii. Superlative terms such as "Best", "No. 1", Top Research Analyst, "Leading", "One of the best amongst market leaders", etc. so as to provide any endorsement of quality or standing of the RA. However, factual details of awards received by the RA from independent organizations may be included. xiv. Advertisements shall not include SEBI Logo. d. Other compliances/requirements: i. Prior approval for the advertisement/material shall be obtained from SEBI recognized supervisory body, if any, before issue. ii. In the event of suspension of any RA by SEBI, the RA so suspended shall not issue any advertisement either singly or jointly with any other RA, during the period of suspension. iii. The RA shall not engage in games, leagues, schemes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d news or rumours. It is a well established fact that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms. 8.2. In view of the above facts, SEBI Registered Market Intermediaries are directed that: a. Proper internal code of conduct and controls should be put in place. b. Employees/temporary staff/voluntary workers etc. employed/working in the Offices of market intermediaries do not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification. c. Access to Blogs/Chat forums/Messenger sites etc. should either be restricted under supervision or access should not be allowed. d. Logs for any usage of such Blogs/Chat forums/Messenger sites (called by any nomenclature) shall be treated as records and the same should be maintained as specified by the respective Regulations which govern the concerned intermediary. e. Employees should be directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive of Regulatory Sandbox is to grant certain facilities and flexibilities to the entities regulated by SEBI so that they can experiment with FinTech solutions in a live environment and on limited set of real users for a limited time frame. 10.2. The guidelines pertaining to the functioning of the Regulatory Sandbox are provided vide SEBI Circular No. SEBI/HO/ITD/ITD/CIR/P/2021/575 dated June 14, 2021 and SEBI/HO/MIRSD/MIRSD_IT/P/CIR/2021/0000000658 dated November 16, 2021 which are available at the link below: https://www.sebi.gov.in/legal/circulars/jun-2021/revised-framework-for- regulatory-sandbox 50521.html_and https://www.sebi.gov.in/legal/circulars/nov-2021/framework-for-regulatory- sandbox 53982.html 11. General Guidelines for dealing with Conflicts of Interest of intermediaries and their Associated Persons in Securities Market.[ Reference: Circular CIR/MIRSD/5/2013 dated August 27, 2013 ] 11.1. All intermediaries are presently governed by the provisions for avoidance of conflict of interest as mandated in the regulations read with relevant circulars issued from time to time by SEBI. On the lines of Principle 8 of the International Organisation of Securities Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce prices of securities; k. not have an incentive structure that encourages sale of products not suiting the risk profile of their clients; l. not share information received from clients or pertaining to them, obtained as a result of their dealings, for their personal interest; 11.5. The Boards of intermediaries shall put in place systems for implementation of the aforementioned guidelines and provide necessary guidance enabling identification, elimination or management of conflict of interest situations. The Boards shall review the compliance of the above guidelines periodically. 11.6. The said guidelines shall be in addition to the provisions, if any, contained in respective regulations/ circulars issued by the Board from time to time regarding dealing with conflict of interest, in respect of intermediaries. 12. Approach to securities market data access and terms of usage of data provided by data sources in Indian securities market [Reference: Circular SEBI/HO/DEPA-III/DEPA-III_SSU/P/CIR/2022/25 dated Feb 25,2022 ] 12.1. Research Analysts are advised to make note of the following: "As far as the data provided by various data sources in Indian securities markets purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.500/137/2011-FTTR-III dated August 31, 2015 is available at http://www.incometaxindia.gov.in/communications/notification/guidance notes on implementation 31 08 2015.pdf, for information and necessary action. 13.5. Research Analysts shall take necessary steps to ensure compliance with the requirements specified in the aforesaid Rules after carrying out necessary due diligence. 14. Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under Research Analysts are advised to refer to SEBI's Master Circular bearing reference no. SEBI/HO/MIRSD/MIRSD-SEC-5/P/CIR/2023/022 issued on February 03, 2023 with respect to 'Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under' available at the following link: https://www.sebi.gov.in/legal/master-circulars/feb-2023/guidelines-on-anti- money-laundering-aml-standards-and-combating-the-financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half yearly: The compliance of the advisory shall be reported by research analysts to SEBI with an undertaking, "Compliance of the SEBI circular for Advisory for Financial Sector Organizations regarding Software as a Service (SaaS) based solutions has been made." 3. To conduct annual audit: In terms of regulation 25(3) of RA Regulations, research analyst or research entity shall conduct annual audit in respect of compliance with RA regulations and circulars issued thereunder from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India. VI. ANNEXURES ANNEXURE A INVESTOR CHARTER IN RESPECT OF RAS A. Vision and Mission Statements for investors * Vision: Invest with knowledge & safety. * Mission: Every investor should be able to invest in right investment products based on their needs, manage and monitor them to meet their goals, access reports and enjoy financial wellness. B. Details of business transacted by the Research Analyst with respect to the investors * To publish research report based on the research activities of the RA. * To provide an independent unbiased view on securities. To offer unbiased recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sured or guaranteed returns. * Don'ts i. Do not provide funds for investment to the Research Analyst. ii. Don't fall prey to luring advertisements or market rumors. iii. Do not get attracted to limited period discount or other incentive, gifts, etc. offered by Research Analyst. iv. Do not share login credential and password of your trading and demat accounts with the Research Analyst. ANNEXURE B COMPLAINT DATA TO BE DISPLAYED BY RAS Formats for investors complaints data to be disclosed monthly by RAs on their website/mobile application: Data for the month ending ____________ Sr. No. Received from Pending at the end of last month Received Resolved* Total Pending# Pending complaints > 3months Average Resolution time^ (in days) 1 Directly from Investors 2 SEBI (SCORES) 3 Other Sources (if any) Grand Total * Inclusive of complaints of previous months resolved in the current month. # Inclusive of complaints pending as on the last day of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Data * System & Sub-System Information * Internal & Partner IP Schema * Network Topography & Design * Audit/Internal Audit Data * System Configuration Data * System Vulnerability Information * Risk Exception Information * Supplier Information & it's dependencies related Data Solution The Financial Sector organisations may be advised to protect such critical data using layered defence approach and seamless protection against external or insider threat. The organisations may also be advised to ensure complete protection & seamless control over their critical system by continuous monitoring through direct control and supervision protocol mechanisms while keeping such critical data within the legal boundary of India. The organisations may also be requested to report back to their respective regulatory authority regarding compliance to this advisory. It is requested that you may kindly keep CERT-In informed of the actions taken and periodically provide the updated compliance to this advisory. (It may be noted that TLP Amber means: limited disclosure, restricted to participants' organizations. When should be used: Sources may use TLP:AMBER when information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt for any offence involving moral turpitude. (vi) No winding up proceedings have been initiated or an order for winding up has been passed against us. (vii) We have not been declared insolvent. (viii) We have not been found to be of unsound mind by a court of competent jurisdiction and no such finding is in force. (ix) We have not been categorized as a wilful defaulter. (x) We have not been declared a fugitive economic offender. 4. We have not been declared as not 'fit and proper person' by an order of the Board. 5. No notice to show cause has been issued for proceedings under SEBI(Intermediaries) Regulations, 2008 or under section 11(4) or section 11B of the SEBI Act during last one year against us. 6. It is hereby declared that we and each of our promoters, directors, principal officer, compliance officer and key managerial persons are not associated with vanishing companies. 7. We hereby undertake that there will not be any change in the Board of Directors of incumbent, till the time prior approval is granted. 8. We hereby undertake that pursuant to grant of prior approval by SEBI, the incumbent shall inform all the existing investors/ clients about the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the work, in case of non performance or failure by a third party by having suitable back-up arrangements; 2.1.3. Regulatory status of the third party, including its fitness and probity status; 2.1.4. Situations involving conflict of interest between the intermediary and the third party and the measures put in place by the intermediary to address such potential conflicts, etc. 2.2. While there shall not be any prohibition on a group entity / associate of the intermediary to act as the third party, systems shall be put in place to have an arm's length distance between the intermediary and the third party in terms of infrastructure, manpower, decision-making, record keeping, etc. for avoidance of potential conflict of interests. Necessary disclosures in this regard shall be made as part of the contractual agreement. It shall be kept in mind that the risk management practices expected to be adopted by an intermediary while outsourcing to a related party or an associate would be identical to those followed while outsourcing to an unrelated party. 2.3. The records relating to all activities outsourced shall be preserved centrally so that the same is readily accessible for rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work within the timelines fixed; 4.2.2. compatibility of the practices and systems of the third party with the intermediary's requirements and objectives; 4.2.3. market feedback of the prospective third party's business reputation and track record of their services rendered in the past; 4.2.4. level of concentration of the outsourced arrangements with a single third party; and 4.2.5. the environment of the foreign country where the third party is located. 5. Outsourcing relationships shall be governed by written contracts / agreements / terms and conditions (as deemed appropriate) {hereinafter referred to as "contract"} that clearly describe all material aspects of the outsourcing arrangement, including the rights, responsibilities and expectations of the parties to the contract, client confidentiality issues, termination procedures, etc. 5.1. Outsourcing arrangements shall be governed by a clearly defined and legally binding written contract between the intermediary and each of the third parties, the nature and detail of which shall be appropriate to the materiality of the outsourced activity in relation to the ongoing business of the intermediary. 5.2. Care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry powers; and 5.2.13. provides for the intermediary and /or the regulator or the persons authorized by it to have the ability to inspect, access all books, records and information relevant to the outsourced activity with the third party. 6. The intermediary and its third parties shall establish and maintain contingency plans, including a plan for disaster recovery and periodic testing of backup facilities. 6.1. Specific contingency plans shall be separately developed for each outsourcing arrangement, as is done in individual business lines. 6.2. An intermediary shall take appropriate steps to assess and address the potential consequence of a business disruption or other problems at the third party level. Notably, it shall consider contingency plans at the third party; co- ordination of contingency plans at both the intermediary and the third party; and contingency plans of the intermediary in the event of non-performance by the third party. 6.3. To ensure business continuity, robust information technology security is a necessity. A breakdown in the IT capacity may impair the ability of the intermediary to fulfill its obligations to other market participants/clients/regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntermediaries and their Associated Persons in Securities Market 5 CIR/MIRSD/3/2014 28-Aug-14 Information regarding Grievance Redressal Mechanism 6 CIR/MIRSD/2/2015 26-Aug-15 Implementation of the Multilateral Competent Authority Agreement and Foreign Account Tax Compliance Act 7 CIR/MIRSD/3/2015 10-Sep-15 Reporting requirement under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS)-Guidance Note 8 SEBI/HO/IMD/DF1/CIR/P/ 2020/147 03-Aug-20 Procedural Guidelines for Proxy Advisors 9 SEBI/HO/CFD/CMD1/CIR/ P/2020/119 04-Aug-20 Grievance Resolution between listed entities and proxy advisers 10 SEBI/HO/IMD/DF1/CIR/P/ 2020/157 27-Aug-20 Procedural Guidelines for Proxy Advisors' - Extension of implementation timeline 11 SEBI/HO/CFD/CMD1/CIR/ P/2020/159 27-Aug-20 Grievance Resolution between listed entities and proxy advisers' -Extension of timeline for implementation 12 SEBI/HO/MIRSD2/DOR/C IR/P/2020/221 03-Nov-20 Advisory for Financial Sector Organizations regarding Software as a Service (SaaS) based solutions 13 SEBI/HO/IMD/DF1/CIR/P/ 2020/256 31-Dec-20 Procedural Guidelines for Proxy Advisors 14 SEBI/HO/IMD/IMD- ..... 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