In a consultation paper released on Monday, Sebi proposed amendments to the Research Analysts Regulations, 2014 and related master circulars to make maintenance of call recordings optional for institutional investor interactions.
At present, research analysts and research entities are required to maintain records of all communications with clients and prospective clients, including emails, SMS records and telephone recordings.
The existing framework requires these records to be preserved for five years, and longer in case of disputes or regulatory review.
Sebi said the proposal follows representations from market participants and the Industry Standards Forum for Research Analysts, which argued that institutional investors are sophisticated entities capable of independently assessing research inputs and investment risks.
According to the consultation paper, institutional investors generally possess specialised knowledge, stronger due diligence capabilities and better awareness of legal and regulatory protections compared with retail investors.
The regulator said the original requirement for recording client interactions was primarily designed as an investor protection measure and supervisory tool, especially for retail participants.”Considering the fact that research analyst business does not involve client-specific investment advice, asset management or transaction execution, it is proposed to relax the existing requirement of maintenance of call records for clients which are institutional investors,” Sebi said in the paper.
Under the proposal, research analysts would continue maintaining all other communication records with institutional clients, including emails, written records and SMS communication, but telephone call recording would no longer be mandatory.
However, the requirement to maintain full records, including call recordings, would continue unchanged for retail clients.
Sebi said the move is intended to create a more “risk-proportionate approach” while lowering operational and compliance costs for research analysts.
The regulator has also proposed formally defining “institutional investor” under the Research Analysts Regulations by linking it to the definition already provided under SEBI’s ICDR Regulations.
The proposed changes would affect interactions involving institutional investors such as mutual funds, insurance companies, pension funds, banks and qualified institutional buyers.
The consultation paper also highlighted that research analysts differ from investment advisers because their services do not typically involve personalised investment recommendations or direct execution of trades.
Industry participants have increasingly raised concerns over the operational complexity and storage costs associated with maintaining large volumes of recorded conversations, particularly for institutional interactions where communication often takes place frequently across teams and platforms.
Sebi move comes as the regulator continues broader efforts to simplify compliance processes across various market intermediaries while retaining core investor protection safeguards.
