SEBI's New Regulations Force Independent Equity Research Firms to Shut Down

SEBI's new regulations for research analysts, issued on January 8, have led to the closure of several independent equity research firms like Stalwart Advisors, Sentinel Research, and Aurum Capital due to high compliance costs.

The rules require firms to maintain client records, conduct audits, follow KYC norms, and limit fee collection to quarterly, which conflicts with long-term investment strategies.

Smaller firms with lean operations find these requirements unsustainable, as operational costs have increased significantly.

While SEBI aims to curb fraudulent firms exploiting retail investors, critics argue the rules penalize genuine players and fail to address the misuse by unqualified influencers.