Trading calls
Intraday, ultra-short and non-personalised buy/sell recommendations — defined so precisely that SEBI's rules say they do not count as investment advice at all.
In plain language
A TV analyst tells viewers to buy a stock today and sell it before the market closes. Is that investment advice?
SEBI says no. It calls this a trading call, and treats it differently from real investment advice.
A trading call is meant for the very short term. It is not built around one person's goals, income or risk appetite. It is a general suggestion, aimed at anyone watching or reading it, not personal advice for one client.
Because it is not personalised, and because it is not meant to be held for long, the rules that protect an investor getting real investment advice do not apply to it in the same way. An investor who acts on a trading call is acting on general market commentary, not on advice built around them.
How it works
The SEBI (Investment Adviser) Regulations, 2013 define investment advice, then carve trading calls out of it: "trading calls shall not be considered as investment advice for purpose of these regulations." For the exact meaning of the term, that regulation borrows the definition from the SEBI (Research Analysts) Regulations, 2014: a trading call is an intraday, ultra-short duration, non-delivery based (other than hedging) recommendation, or any recommendation on securities that is not personalised or investor specific.
Three features do the work together: it is very short-term (intraday or ultra-short), it does not involve taking delivery of the security, and it is generic rather than tailored to one investor. The same clause of the 2013 Regulations also excludes advice given through newspapers, magazines, or any electronic or broadcast medium that is widely available to the public — a second, separate carve-out sitting next to the trading-calls one.
A worked example
Illustrative, following the workbook's own definition.
A market commentator on a business channel says: 'Buy Infosys today at Rs 1,500, target Rs 1,540, stop-loss Rs 1,480, square off by 3:15 pm.' This is a trading call: intraday, non-delivery based, and aimed at every viewer rather than at one investor's goals or risk profile.
Compare a SEBI-registered investment adviser who, after assessing one client's risk profile and goals, recommends holding Infosys shares for five years inside a long-term portfolio. That recommendation is personalised, is not intraday, and is delivery-based, so it is investment advice — giving it for a fee requires the adviser to be registered with SEBI under the Investment Adviser Regulations, 2013.
The line between the two recommendations is exactly the three features in the definition: duration, delivery, and whether it is personal to the investor.
Why NISM asks about it
Chapter 18 (Key Regulations), section 18.6.1 (Definitions), inside the definition of "investment advice" under the SEBI (Investment Advisers) Regulations, 2013, with "trading calls" defined by reference to the SEBI (Research Analysts) Regulations, 2014. Expect a question that gives a recommendation and asks whether it counts as investment advice, testing the intraday/non-delivery/non-personalised markers of a trading call.
Common exam traps
- A trading call is defined by three features together — intraday or ultra-short duration, non-delivery based, and not personalised — not by any one of them alone.
- Trading calls are excluded from "investment advice" by name, alongside advice given through newspapers, magazines or broadcast media that is widely available to the public — two separate carve-outs, easily confused as one.
- The definition is borrowed, not original — it comes from the SEBI (Research Analysts) Regulations, 2014, not the Investment Adviser Regulations themselves.
- Hedging is the one exception inside "non-delivery based" — a non-delivery recommendation made for hedging is not automatically a trading call.
Check yourself
1.Which of the following falls OUTSIDE the definition of "investment advice" under the SEBI (Investment Advisers) Regulations, 2013?
- a)Financial planning for a client
- b)Oral advice on buying a particular share
- c)Advice given through a newspaper or broadcasting medium widely available to the public
- d)Written advice on an investment portfolio containing securities
Show the answer
Answer: (c) Advice given through a newspaper or broadcasting medium widely available to the public
Investment advice includes advice whether written, oral or through any other means of communication for the benefit of the client, and shall include financial planning. But two provisos exclude advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium WHICH IS WIDELY AVAILABLE TO THE PUBLIC, and trading calls.
Where this is taught
Free preparation for NISM Series X-ARelated terms
- Research AnalystUnder the SEBI (Research Analysts) Regulations, 2014, a person who, for consideration, is engaged in the business of providing research services — including a part-time research analyst.
- Investment adviceAdvice on buying, selling or dealing in securities or investment products, including financial planning. Only a SEBI-registered Investment Adviser may give it for a fee; mass-media commentary is excluded.
- Investment adviserAny person who, for consideration, is in the business of giving investment advice, including anyone holding out as one — but not an AMFI-registered distributor whose advice is incidental to distribution.