n NISM Certifications
XV NISM Series XV
Medium

According to SEBI Regulation 17 of the Code of Conduct for research analysts, which approach is allowed to determine a research analyst’s bonus?

Practice question from NISM XV Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Bonus based on brokerage revenue from the stocks they cover

  2. B

    Bonus based on performance of the stocks they recommended

  3. C

    Bonus based on investment banking revenue for transactions recommended

  4. Bonus based on the overall revenue of the brokerage division, irrespective of the sector/stocks covered

    Correct answer

Why this is the answer

SEBI prohibits linking analyst bonuses to specific stock performance or investment banking deals to avoid conflicts of interest; only overall division revenue can be used.

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