Journalists under new Sebi norms

The Securities and Exchange Board of India (Sebi) said on Tuesday the norms covering research analysts' recommendations would also apply to journalists.

"Sebi (Research Analyst) Regulations, 2014, cover any person, including journalists, who make public appearance or make comments through the public media for giving opinion or recommendations concerning securities or on public offers," Sebi stated on its website on Tuesday.

It clarified this would exclude certain broad stories such as those on general market direction. Sebi's clarification was part of a set of frequently asked questions on the new norms released on Tuesday.

The other exclusions include general trends in the securities market; discussions on the broad-based indices; commentaries on economic, political or market conditions, statistical summaries of financial data of companies and technical analyses relating to the demand and supply in a sector or index-based on trading volume and price.

This would still mean rules on disclosures apply, only as it would to any registered research analysts.

"However, if they make public appearance or make a recommendation or offer an opinion concerning securities or public offers through public media, all the provisions of regulations - 16 on limitations on trading and 17 on limitations on compensation shall apply... and they shall disclose their names, registration status and details of financial interest in the subject company," the Sebi stated.

Section 16 says personal trading activities of the individuals employed as research analysts by research entity shall be monitored, recorded and wherever necessary, shall be subject to a formal approval process. It goes on to say analysts and their associates are not allowed to deal in securities recommended or followed, for 30 days before a report and five days after its publication.

Section 17 says that research analysts' compensation should not be based on services whose activities might create a conflict of interest with the recommendations.

"Not all stories are recommendations. One will have to see if this applies only to securities recommendations, which have a 'buy' or 'sell' outcome; or if journalists who write regular news stories would also now have to disclose their holdings," said the former head of the research team at another major newspaper.

Both spoke on condition of anonymity.

The regulator has gone on to add that journalists would be exempt from registering with the regulator, which involves payment of fees ranging from Rs 5,000 to Rs 10,000 for individuals; and Rs 5 lakh for corporate bodies. Research analysts are also required to have a minimum net worth of Rs 1 lakh if they are individuals, and Rs 25 lakh if they are corporate entities.

"Journalists who are on the payrolls of a media agency such as a newspaper or television are not required to get registered with Sebi," said the note.