Capital markets regulator Sebi has proposed relaxing mandatory call recording requirements for research analysts interacting with institutional investors, as reported by The Economic Times. In a consultation paper released on Monday, the regulator proposed amendments to the Research Analysts Regulations, 2014 and related master circulars to make maintenance of call recordings optional for institutional investor interactions. The proposal recognizes institutional clients as sophisticated entities capable of independently assessing research inputs and investment risks, with SEBI plans to amend the Research Analysts Regulations, 2014 to implement these changes and seeks public feedback by June 8. According to the latest reports, the proposal seeks to exempt research analysts from maintaining call recordings of conversations with institutional investors, while continuing to require preservation of other forms of communication such as emails, SMS records, and legally verifiable documents. As per The Economic Times, 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.
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, according to The Economic Times. The existing framework requires these records to be preserved for five years, and longer in case of disputes or regulatory review. Under the proposed changes, 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. The proposed easing will apply solely to institutional investors, while the requirement for maintaining comprehensive records, including call recordings, will persist for retail clients. According to SEBI, the proposal clarifies that while call recordings may not be mandatory for institutional clients, firms must continue to preserve alternative documentary evidence of interactions wherever available. 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.
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, as reported by The Economic Times. The regulator noted that the original requirement for recording client interactions was primarily designed as an investor protection measure and supervisory tool, especially for retail participants. The proposed changes would affect interactions involving institutional investors such as mutual funds, insurance companies, pension funds, banks and qualified institutional buyers. SEBI's proposal is informed by industry representations emphasizing that institutional investors possess the expertise to independently assess research information and are aware of their legal rights and available protections. The Industry Standards Forum for Research Analysts highlighted that such investors possess specialized knowledge, strong internal due diligence frameworks, and awareness of legal remedies available under securities laws.
Sebi said the move is intended to create a more 'risk-proportionate approach' while lowering operational and compliance costs for research analysts, according to The Economic Times. 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, 2018. 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. The proposed changes aim to lessen the compliance burden and enhance business efficiency for research analysts. SEBI noted that the primary purpose of maintaining communication records is investor protection and grievance redressal, but acknowledged that institutional investors differ significantly from retail investors in terms of risk awareness and bargaining power. The regulator's move comes as part of broader efforts to simplify compliance processes across various market intermediaries while retaining core investor protection safeguards.
SEBI has invited public comments on the proposal until June 8, 2026, before finalizing the amendments, as reported by Moneycontrol. The proposal seeks to amend the Master Circular for Research Analysts to align operational guidance with the revised regulation. The regulator clarified that the relaxation would apply only to institutional clients, while research analysts would still be required to maintain complete communication records, including call recordings, for retail clients and other non-institutional investors. 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 evaluating research inputs and investment risks. The consultation paper also emphasized that 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.
