The Research Analyst Administration and Supervisory Body (RAASB) is a self-regulatory organization recognized by SEBI for the administration and supervision of Research Analysts (RAs). SEBI has recognized BSE Limited as the RAASB for a period of five years starting from July 25, 2024. This article provides a comprehensive technical analysis of RAASB and how self-regulatory supervision of RAs works.
Regulatory Basis
Primary Provision: Regulation 14
Regulation 14 of the SEBI (Research Analysts) Regulations, 2014 provides that:
"The Board may recognize a body or body corporate for the purpose of administration and supervision of research analysts to such extent and on such terms and conditions as may be specified by the Board."
Recognition Circular
The circular dated July 12, 2024 (SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/101) confirmed the recognition of BSE Limited as RAASB for a period of five years starting from July 25, 2024.
What is RAASB?
Definition
RAASB is the Research Analyst Administration and Supervisory Body recognized by SEBI for the administration and supervision of Research Analysts.
Recognition
BSE Limited has been granted recognition under Regulation 14 of the RA Regulations as RAASB for a period of five years starting from July 25, 2024.
One and Same Stock Exchange
To begin with, in order to ensure efficiency in the system and economies of scale, RAASB and IAASB shall be one and the same stock exchange, i.e., BSE Limited.
Recognition Criteria
SEBI granted recognition to BSE based on the following eligibility criteria:
| Criteria | Requirement |
|---|---|
| Minimum Years of Existence | 15 years |
| Minimum Net Worth | INR 200 crores |
| Nationwide Terminals | Yes |
| Investor Grievance Redressal | Including ODR |
| Investor Service Centers (ISCs) | In at least 20 cities |
RAASB Structure
Internal Committee
RAASB shall constitute an internal committee to oversee the activities of administration and supervision of RAs.
Committee Composition:
- Public Interest Directors shall form the majority
- Maximum of two key management personnel of the stock exchange
- Independent external persons representing RAs, IAs, and proxy advisors (minimum one representative for each segment)
Periodic Review
The committee shall periodically review the performance of the stock exchange as RAASB and make recommendations to SEBI.
Responsibilities of RAASB
Activities Pertaining to Administration
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Initial scrutiny of registration applications for ensuring completeness of submission of information/documents along with recommendation on the applications to SEBI.
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Initial scrutiny of post-registration applications:
- Change of name
- Change of address
- Change of compliance officer/principal officer/director/associated person, contact details
- Change in shareholding
- Merger/amalgamation/takeover/change in control of RA/IA
- Surrender of registration
- NOC for establishing wholly owned subsidiary/joint venture in foreign jurisdiction
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Approval of advertisements of RAs/IAs as per Advertisement Code issued by SEBI.
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Maintenance of database of RAs/IAs.
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Enlisting RAs/IAs in the proposed RAASB/IAASB.
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Issuance of circulars/instructions/standard operating procedures, etc. to RAs/IAs for implementation of provisions of SEBI regulations/circulars.
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Submission of periodical reports to SEBI.
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Collection and administration of fees.
Activities Pertaining to Supervision
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Monitoring the activities of RAs/IAs by obtaining Annual Compliance Audit Report and other periodic/ad-hoc reports covering general details of RAs/IAs, details of customer complaints, details of clients, etc.
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Monitoring compliance of regulations/circulars by RAs/IAs.
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Grievance redressal and Arbitration/Online Dispute Resolution (ODR).
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Taking administrative action including imposition of penalties and issuing warning/caution letter.
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Referring to SEBI for enforcement action against RAs/IAs.
Additional Activities
RAASB may be assigned with:
- On-site/offsite inspection of RAs/IAs
- To be done on behalf of/concurrently with SEBI
- Any other activity as may be specified by SEBI
Concurrent Functions
The following functions shall be performed concurrently by SEBI and RAASB:
| Function | SEBI | RAASB |
|---|---|---|
| Registration | Approval | Initial scrutiny and recommendation |
| Post-registration | Approval | Initial scrutiny and recommendation |
| Supervision | Yes | Yes |
| Enforcement | Yes | Referral |
| Penal Action | Yes | Recommendation |
| Grievance Redressal | Yes | Yes |
Monitoring of RAASB
SEBI shall monitor RAASB through:
- Periodical reports
- Inspection regarding administration and supervision of RAs
Key Features of RAASB
1. Self-Regulatory Model
RAASB operates under a self-regulatory model with SEBI oversight.
2. Five-Year Recognition
RAASB is recognized for a period of five years starting from July 25, 2024.
3. Concurrent Functions
Certain functions are performed concurrently by SEBI and RAASB.
4. Fee Neutrality
RAASB administrative fees are fee neutral.
5. Deemed Enlistment
Existing RAs are deemed to be enlisted with RAASB.
Common Compliance Gaps
1. Not Understanding RAASB Role
Some RAs do not understand RAASB's role.
Solution: Understand RAASB's functions and responsibilities.
2. Not Cooperating with RAASB
Some RAs do not cooperate with RAASB.
Solution: Cooperate fully with RAASB.
3. Not Submitting Reports
Some RAs do not submit periodic reports to RAASB.
Solution: Submit all required reports.
Conclusion and How Anuj Desai & Associates Can Help
RAASB plays a critical role in the administration and supervision of RAs.
Anuj Desai & Associates offers specialized services to help RAs navigate the RAASB framework:
- Understanding RAASB requirements
- Registration and enlistment support
- Periodic reporting
- Compliance audit and advisory
Contact us today to ensure your RAASB compliance. Our team will guide you through the process.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.