SEBI Consultation Paper on Call Records for Institutional Clients

Paper Issued

18 May
2026

Comment Deadline

08 June
2026

Status

Open for
Comments

Individual Research Analysts

Individual equity analysts who prepare and publish research reports independently — freelance analysts, independent research providers, financial bloggers providing paid research.

Research Entities

Companies or LLPs engaged in research activities — e.g., brokerages' research departments, independent research firms, equity research boutiques serving institutional and retail clients.

🛡️ Investor Protection

To create an evidentiary trail — if an investor complained that an RA made misleading claims or recommendations verbally that were not reflected in the written research report, call recordings provided proof.

🔍 Supervisory Oversight

To enable SEBI and exchanges to review and audit analyst communications during inspections — detecting front-running, preferential communication of research, or market manipulation.

❌ BEFORE: Current Rule

For ALL clients (retail + institutional):

• 📞 Call recordings — MANDATORY
• 📧 Email records — Mandatory
• 💬 SMS records — Mandatory
• 📝 Written records — Mandatory
• 🗂️ Preservation: 5 years minimum

✅ AFTER: Proposed Rule

For institutional clients:

• 📞 Call recordings — OPTIONAL (Not Mandatory)
• 📧 Email records — Still Mandatory
• 💬 SMS records — Still Mandatory
• 📝 Written records — Still Mandatory
• 🗂️ Preservation: 5 years (for required records)

For retail clients: No change — all requirements including call recording remain.

📞 Call Recording — Retail Clients

Call recording for all interactions with retail investor clients remains mandatory — no relaxation whatsoever. The investor protection rationale is strongest for retail participants.

📧 All Other Communication Records — Institutional Clients

Emails, SMS messages, written correspondence, and all other verifiable communication records with institutional clients continue to be mandatory. Only call recordings are being relaxed.

🗂️ 5-Year Preservation Period

All records that are required to be maintained (emails, SMS, written correspondence) must still be preserved for a minimum of 5 years — and longer if a dispute or regulatory review is ongoing.

📋 Research Report Disclosures

All other compliance requirements for RAs remain unchanged — disclosures in research reports, conflict of interest declarations, analyst certifications, trading restrictions, compliance officer requirements, etc.

🔍 SEBI Inspection Access

SEBI retains full inspection and audit rights. All required records (including emails and written records for institutional clients) must be produced on demand during inspections or investigations.

🏷️ Client Classification Obligation

RAs must maintain clear client classification records — identifying which clients are institutional and which are retail. The burden of correctly categorising clients falls on the RA — misclassification to avoid recording requirements would be a compliance violation.

⚠️ In ALL cases: Ensure client classification is properly documented in your records — both retail and institutional. The burden of correct classification is on the RA.

✅ Benefits — Research Analysts

• Reduced infrastructure cost — no call recording systems needed for institutional-only interactions
• Smaller RAs benefit most — boutique research firms with institutional client base face proportionally larger cost relief
• More candid discussions with institutional portfolio managers — better research quality
• Reduces operational complexity of managing dual recording systems
• Frees compliance resources to focus on more value-added oversight activities

📊 Benefits — Institutional Investors

• More open and frank analyst briefings — analysts can share preliminary or tentative views without fear of recording-based scrutiny
• Better engagement quality with research teams — richer discussions
• Encourages institutional investors to have more frequent research analyst interactions
• Aligns with global market practice where analyst-institutional investor calls are typically not recorded

⚠️ Risks and Safeguards

• Risk of misclassification — RAs mis-categorising retail clients as institutional to avoid recording
• Potential for preferential verbal communication — sharing market-moving views verbally that aren't in published reports
• SEBI mitigates this by retaining email/SMS/written record requirements — any actionable communication must still leave a written trail
• SEBI retains full inspection powers — can still investigate suspicious patterns

⚖️ For Compliance Officers of Research Entities

• Must establish robust client classification policies — clearly documenting institutional vs retail status
• Update compliance manuals once the final regulation/circular is issued
• Ensure call recording systems are updated to differentiate institutional from retail client calls (if a mixed client base)
• Train analysts on new obligations — particularly what they can/cannot discuss in unrecorded calls vs. written format

Q1   Does this mean Research Analysts can now say anything to institutional clients on phone without accountability?

Absolutely not. The relaxation removes only the mandatory call recording obligation — it does not remove accountability. First, all emails, SMS, and written communications with institutional clients remain mandatory — so any actionable communication or recommendation must still be documented in writing. Second, institutional investors have their own compliance obligations — they maintain records of significant conversations as part of their own regulatory requirements. Third, SEBI retains full inspection and investigation powers — if suspicious patterns are detected through other channels (unusual trading, market intelligence), SEBI can still investigate without relying on call recordings. The relaxation removes one layer of compliance infrastructure; it does not create a communication safe harbor.

Q2   I am an RA with both retail and institutional clients. Do I need two separate call recording systems?

Once the proposal is finalised, you will need a system that differentiates between retail and institutional client calls. Options include: (i) maintaining call recording only for retail client lines/numbers, (ii) having separate phone lines or extensions for institutional vs retail client interactions, or (iii) configuring your existing recording system to flag institutional client calls for optional recording while making retail client recording automatic. The compliance obligation is to ensure retail client calls are recorded — how you technically achieve that separation is for you to determine. Most RAs with larger institutional client bases may find it simplest to maintain recording capability only on their retail client communication channels.

Q3   Who exactly qualifies as an "institutional client" for this relaxation? Does a High Net Worth Individual (HNI) count?

The relaxation is proposed for institutional investors / Qualified Institutional Buyers (QIBs) as defined under SEBI regulations. QIBs include mutual funds, FPIs, insurance companies, AIFs, scheduled commercial banks, pension funds, and other specified entities. High Net Worth Individuals (HNIs) — even those with very large portfolios — are NOT institutional investors or QIBs for this purpose. HNIs are retail clients, regardless of the size of their investment or their sophistication. An HNI calling your research firm would still require call recording. Even "accredited investors" (under SEBI's accreditation framework) are not the same as QIBs/institutional investors — the consultation paper specifically uses the institutional investor / QIB definition, not accredited investor.

Q4   Can I apply this relaxation right now, since SEBI has issued the consultation paper?

No — not yet. A consultation paper is a proposal for public comment, not a regulation or circular. The current regulatory requirement under Regulation 25 of the RA Regulations and the existing Master Circular remains fully operative. You must continue recording calls with all clients — retail and institutional — until the amendment to the RA Regulations is formally notified in the Official Gazette and the updated Master Circular is issued. Applying the relaxation prematurely on the basis of the consultation paper would be a compliance violation. Monitor SEBI's official website for the final notification.

Q5   How does this proposal relate to SEBI's broader Ease of Doing Business push for intermediaries?

This proposal is part of SEBI's consistent Ease of Doing Business (EoDB) initiative — which has been a major regulatory priority since 2023-24. Under this initiative, SEBI has been systematically identifying compliance requirements where the cost-benefit ratio is unfavourable — particularly where the compliance burden is high but the incremental investor protection benefit is low. The call recording relaxation for institutional clients is a textbook example: high infrastructure cost (recording systems), minimal incremental protection (institutional investors don't need recording-based protection), and no reduction in accountability (email/SMS/written records still required). The Industry Standards Forum for Research Analysts specifically flagged this as a high-priority EoDB issue, and SEBI has responded. Similar targeted relaxations are expected across other intermediary categories in the coming months.

Q6   As a Compliance Officer of a Research Entity, what actions should I take right now?

Immediate actions: (i) Read the full consultation paper at sebi.gov.in and assess its implications for your specific client mix. (ii) If you have views on the proposal — particularly on the scope of "institutional clients," the adequacy of written record requirements as a substitute, or the need for client classification documentation — file comments with SEBI before 08 June 2026. (iii) Do not discontinue call recordings yet — current regulations remain operative. (iv) Begin internally reviewing your client database to identify and document which clients qualify as institutional — so that once the amendment is finalised, you can implement it smoothly and swiftly. (v) Start evaluating whether any changes to your call recording infrastructure or call routing systems will be needed once the final regulation is issued.