While regulated entities like brokerage firms, investment banks and fund houses are already under Sebi's ambit for their research reports, the capital markets watchdog is now working on a detailed code of conduct and guidelines to be followed by the 'independent' research analysts, a senior official said.
Earlier this year, Sebi notified separate Investment Advisor Regulations, which covers registered individuals and entities providing research and advisory services for a fee.
However, it was felt that a separate code or set of guidelines needs to be prescribed for all kinds of research analysts, the official said.
This would help remove a regulatory gap exploited by the individuals and entities who do not register themselves with Sebi to avoid any action for manipulative actions carried on the basis of research reports published by them on the Indian stock markets and individual shares, he added.
A recommendation was made in this regard late last year by Sebi's International Advisory Board, which had looked into the role played by various entities as research analysts.
It had suggested framing of a separate code or set of guidelines for research analysts and those recommendations are being examined now for implementation, sources said.
The International Organisation of Securities Commissions has also suggested to Sebi that research analysts need to be subjected to appropriate oversight and regulation.
Among the proposed measures, the analysts could be asked to make extensive disclosures regarding their incentive structure, shareholding pattern, market dealings, and various direct and indirect business interests.
Various registered market intermediaries are already required to put in place certain 'Chinese Walls' to avoid any conflict of interest arising out of the reports published by their equity research units.
The new rules could also prescribe mechanisms to ensure that the research analysts' trading activities or financial interests do not prejudice their reports.
While Sebi has been in favour of good quality research reports, it wants to ensure greater accountability in the conduct of independent analysts.
It has been often felt that research reports as such might not be violating any rules, but they might be used by vested interests for stock market manipulations.
Sebi has come across instances where bear cartels have used negative issues raised in these reports to beat down the shares, while positive reports have been used to push the prices higher as well.
The guidelines would be framed in such a manner so that it does not amount to putting curbs on expression of opinion.