Under Regulation 16 of the SEBI (Research Analysts) Regulations, 2014, what specific trading restrictions apply to research analysts and their associates regarding securities they follow or recommend?

[ A ]They are required to trade at least Rs. 1 crore worth of the recommended stock within 5 minutes of publishing the report.

[ B ]They are legally mandated to execute opposite short-sale trades to profit against their retail clients' buy orders.

[ C ]They shall not trade in securities they recommend within 30 days before and 5 days after the publication of a research report, shall not trade contrary to their given recommendations, and shall not purchase pre-IPO shares of companies in their coverage sectors.[ CORRECT ]

[ D ]There are zero personal trading restrictions; analysts can freely trade on undisclosed internal research before client distribution.

Takeaway

Option C is correct: They shall not trade in securities they recommend within 30 days before and 5 days after the publication of a research report, shall not trade contrary to their given recommendations, and shall not purchase pre-IPO shares of companies in their coverage sectors.

Derivation

Under Regulation 16 of SEBI (Research Analysts) Regulations, 2014, personal trading by research analysts and their associates is strictly controlled to prevent front-running and conflicts of interest: (1) Blackout Period: They cannot trade in securities they recommend/follow within 30 days prior to and 5 days after publishing a research report. (2) Consistency Rule: They cannot trade directly or indirectly in a manner contrary to their active published recommendations (e.g., selling personal shares while rating a stock 'Buy'). (3) Pre-IPO Ban: They cannot acquire pre-IPO shares of companies in sectors they follow. This tests personal trading compliance rules. The common error is inverting the blackout window (confusing 30 days before and 5 days after).

Why the others fail

A — They are required to trade at least Rs. 1 crore worth of the recommended stock within 5 minutes of publishing the report.

Forcing personal trading volume is completely false; personal trading during publication windows is strictly barred.

B — They are legally mandated to execute opposite short-sale trades to profit against their retail clients' buy orders.

Trading contrary to active published recommendations is a severe, punishable violation under SEBI Research Analyst regulations.

D — There are zero personal trading restrictions; analysts can freely trade on undisclosed internal research before client distribution.

Trading ahead of client research release represents illegal front-running and is strictly prohibited by SEBI regulations.