Understanding SEBI’s MITC for Research Analysts

Introduction

SEBI’s recent guidelines bring much-needed structure to the way Research Analysts (RAs) interact with clients.[1] By standardizing the Most Important Terms and Conditions (MITC), these rules ensure greater clarity on fees, payment options, and conflict disclosures. For analysts, this means more compliance work, but for investors, it offers better safeguards against misleading claims and hidden charges. The shift also introduces a centralized fee collection system and a more structured dispute resolution process.

Purpose of the Circular

• As per Regulation 24(6) of the SEBI (Research Analysts) Regulations, 2014 (RA Regulations)[2], Research Analysts are required to disclose the terms and conditions of their research services to clients and obtain their consent.
• SEBI, through a previous circular dated January 8, 2025, had already set minimum disclosure requirements for Research Analysts.[3]
• The Industry Standards Forum (ISF), in consultation with RAASB (Research Analyst Administration and Supervisory Body) and SEBI, has standardized the MITC that must be disclosed to clients.

Implementation Timeline and Compliance

• Annexure A of the circular contains the standardized MITC for Research Analysts. They have been developed by ISF.
• It is required to inform the existing clients about the MITC by June 30, 2025. This can be done via email or any other suitable and preservable mode of communication.
• RAs are required to incorporate the MITC into their Terms and Conditions. They also have to disclose it to their clients and obtain their consent.
• The provisions of this circular are effective immediately from February 17, 2025.

Most Important Terms and Conditions (MITC) for Research Analysts

General Restrictions on Research Analysts (RAs)

• RAs cannot execute or carry out any trade (buy/sell transactions) on behalf of clients.
• Clients are advised not to permit RAs to execute trades on their behalf.

Fee Structure & Limits

• The maximum fee an RA can charge to an Individual or HUF client is ₹1,51,000 per annum per family for all research services combined.
• Exclusions: The fee limit does not cover statutory charges and does not apply to non-individual clients or accredited investors.

Advance Fees and Refund Policy

• RAs can charge fees in advance, but only for a maximum period of one quarter as per SEBI rules.
• If either the RA or the client terminates the services prematurely, the client is entitled to a proportionate refund for the unused period.

Payment Methods

• Clients have the option to pay only through approved methods. This includes cheques, online bank transfers, and UPI.
• Cash payments are strictly prohibited.
• Clients also have the option to make payments through the BSE’s Centralized Fee Collection Mechanism (CeFCoM), which is currently managed by RAASB.

Conflict of Interest Disclosure

• Ras are required to comply with SEBI and RAASB regulations in order to identify, disclose, and litigate any actual or potential conflicts of interest.
• If a conflict arises, the RA has to immediately inform the client.

Prohibited Activities & Fraud Prevention

• Guaranteed returns, assured profit schemes, or any similar investment guarantees are strictly prohibited by law.
• RAs cannot promise profits or risk-free investments based on their research.
• Clients should be aware that all opinions, projections, and estimates by an RA are based on available data and assumptions at the time of research publication.

Risk Disclosure for Clients

• Investments made based on RA recommendations are subject to market risks.
• Research reports do not assure profits, and clients cannot claim compensation for losses incurred.
• Clients should exercise independent judgment when relying on research reports.

SEBI Registration & Certification Limitations

• SEBI registration, RAASB enlistment, and NISM certification do not guarantee RA performance or returns.
• These credentials only certify eligibility and not the success of the investment.

Grievance Redressal Mechanism

If a client has a grievance against an RA, they should follow these steps:

• Step 1: Contact the RA directly using the details provided on their website or in the Grievance Redressal/Escalation Matrix.
• Step 2: If the response is unsatisfactory, the client can file a complaint on SEBI’s SCORES platform at www.scores.sebi.gov.in.
• Step 3: The client can also seek Online Dispute Resolution (ODR) via the Smart ODR portal at https://smartodr.in.

Client Responsibilities

• Clients are required to keep their contact details updated with the RA. These include their email and mobile number.
• The clients should never share login credentials, OTPs, or sensitive financial information with anyone, including the RA.
• The RA must never ask for client credentials related to their trading account, Demat account, or bank account.

Impact on the Industry

These new MITC rules are a big change for how RAs and clients work together.  SEBI’s goal is simple: more transparency. They want clear rules about fees, conflicts of interest, and payments.  This should give investors more confidence in research services and make the whole analyst-client relationship much clearer.

For RAs, these new requirements bring additional responsibilities. The tighter regulations on advance payments, disclosures, and prohibited activities may feel like extra compliance work at first. However, they serve a bigger purpose—minimizing disputes, improving accountability, and reinforcing client trust. On the investor side, the framework offers much-needed clarity. Clients now have a better understanding of service charges, risks, refund policies, and their rights when things go wrong. The outright ban on assured returns and unauthorized trading also acts as a safeguard against misleading promises and unethical conduct.

At an industry level, SEBI’s push for a centralized fee collection system (CeFCoM) could simplify transactions while increasing accountability. Additionally, the improved grievance redressal mechanisms – such as SCORES and Smart ODR – give investors quicker, more structured ways to resolve disputes.

Conclusion

SEBI’s move to standardize terms and conditions for research analysts is a clear attempt to increase transparency and investor protection. While potentially increasing compliance costs for RAs, these changes should reduce disputes and build confidence in the industry. The effectiveness of this circular will depend on SEBI’s enforcement and the industry’s willingness to adapt. Ultimately, it prompts a necessary evolution in the research analyst landscape, with potential benefits for both investors and the industry as a whole.

[1] https://www.sebi.gov.in/legal/circulars/feb-2025/most-important-terms-and-conditions-mitc-for-research-analysts_91965.html.

[2] https://www.sebi.gov.in/legal/regulations/dec-2024/securities-and-exchange-board-of-india-research-analysts-regulations-2014-last-amended-on-december-16-2024-_90153.html.

[3] https://www.sebi.gov.in/legal/circulars/jan-2025/guidelines-for-research-analysts_90634.html.