If SEBI has its way, the equity research reports from many brokerages you read will now give you more information about the analysts concerned. In other words, the analysts who write equity research reports will now be subject to more regulation. Amongst the important regulations is the one where the analyst will have to declare whether the listed firm he is tracking also has banking relationships through one of the other arms of the analyst's broking firm. This is a serious matter because an analyst can always write a positive report about this firm and bring benefits both to his employer as well as the listed firm. In such cases therefore, the analyst is not working in the interest of the small investor and there is a genuine conflict of interest. A disclosure to this effect therefore is a welcome step we believe. Another important regulation being mooted is a common certification for all analysts from the National Institute of Securities Market. However, what may not be possible to track is the quality of the report and whether there is sufficient depth in it. And therefore investors, especially the new ones will have to continue to rely on stock advisors with good long term track record and a reputation for honest practices.
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