The investor who enters into the stock market enters through direct route or indirect route. Indirect route is investing in the stock market through equity mutual funds, debt funds, ULIPS etc. Usually, the knowledge required for the stock market investment through these routes is minimal.
Now comes direct route where the investor invests directly into the stocks, this is where the role of the research analyst comes into play. Perhaps, the amount of data available for commodity or company is too much for an individual to make a decision. The information available from so many sources and different types of information available make it even more complex. At times the information is processed and sometimes the information is raw which is not possible for an individual to process and then analyse. This is where the roles of research analyst come in.
The Pre-requisites of Getting Registered with SEBI as a Research Analyst
To make the process simple and uniform National Institute of Securities Markets was established by Securities and Exchange Board of India (SEBI) to issue the certificates of Research Analyst (RA).
The National Institute of Securities Markets (NISM) has been established by the Securities and Exchange Board of India (SEBI) to conduct academic programmes and certification examinations for financial education.
The new regulations would require that any individual seeking registration as a ‘Research Analyst, are those engaged in preparation or publication of research analysis and reports have certain minimum qualifications.
These would include a professional qualification, a post-graduate degree or a post-graduate diploma in finance, accountancy, business management, commerce, economics, capital market, financial services or markets.
Such a degree would need to be from a university recognised by the UGC (University Grants Commission) or by an equivalent establishment.
In simple understanding a research analyst analyses a security including a stock or a mutual fund or a commodity and gives buy or sell or hold recommendation.
Most People confuse themselves with Investment Advisor which completely difference from Research Analyst.
What is Covered Under Research Analyst (RA)
The RA Regulations do not cover personnel engaged in clerical activities/marketing activities, back-office assistance, support services, etc, in relation to publication and/or distribution of research report.
As per the regulations, “research analyst” means a person who is primarily responsible for,-
i. preparation or publication of the content of the research report; or
ii. providing research report; or
iii. making ‘buy/sell/hold’ recommendation; or
iv. giving a price target, or
v. offering an opinion concerning public offer,
with respect to securities that are listed or to be listed on a stock exchange, whether or not any such person has the job title of ‘research analyst’ and includes any other entities engaged in the issuance of the research report or research analysis. Explanation.-The term also includes any associated person who reports.
Eligibility to become a Research Analyst?
Once you have decided that you want to become a research analyst. Check for yourself if you have the needed qualification.
You should be a professional in commerce is the foremost requirement. Any of these should work for your a professional degree, a post-graduation from a reputed college, diploma degree from a reputed college the major or minor should include, Business Management, Finance, Commerce, Economics, Capital Markets, Derivatives, etc.
Even a working experience of working in any of the above disciplines for more than 5 years would be a consideration.
An engineering degree with 5 years plus experience in a research firm is a positive for getting the certification or engineering degree with post graduation chances are there. But an engineering degree without experience there is no possibility of getting the certification.
Once you clear the eligibility criteria you would be required to take up an examination from NISM.
NISM-Series-XV: Research Analyst Certification Examination
Assessment Structure: The examination consists of 100 questions of 1 mark each and should be completed in 2 hours. The passing score for the examination is 60%. There shall be negative marking of 25% of the marks assigned to a question for each wrong answer.
Application Submission Details
Once you have cleared the NISM examination and got the results the process is half done. But the most important process of the application submission is pending.
You would be required to collect the document along with the form and send it to.Along with the form A, applicants need to pay Rs. 5000 as the application fees. You need to draft this amount in favour of “The Securities and Exchange Board of India,” that is payable at Mumbai.
List of Documents
Net worth Certificate from Registered CA
Voter ID or Aadhar Card
Last 3 Year IT Return
Form A (Fill this form carefully)
NISM Research Analyst Exam Certification
Written Given Disclosures and Disclaimers
CIBIL Score (Optional)
In detail How to get registered as a Research Analyst and Instructions for filling in Form A.
Fees structure is different for different people read the details structure for the fees that one has to pay for the research analyst.
For further doubts, you can see the SEBI FAQ for getting more clarifications.
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Also published on Medium.