Sebi directs regulated entities to end ties with unregistered advisors

Issues draft circular for recognising digital platforms for associations with registered entities

The Securities and Exchange Board of India (Sebi) on Tuesday restricted the association of registered entities and their agents with people who provide financial advice without registration or make claims of returns or performance in the securities market.

The norms, popularly called the ‘financial influencer or finfluencer guidelines,’ are a step to curb misleading information and manipulation in the market.

Sebi had first approved these decisions in its board meeting in June and has now issued a circular on the same.

“The persons regulated by the board (including recognised stock exchanges, clearing corporations, and depositories), and their agents, are advised to terminate their existing contracts, if any, with persons engaged in the activities mentioned in the clauses of this circular within three months from the date of issuance of this circular,” said Sebi.

 

The regulator has provided relief for associations with people engaged in investor education, subject to conditions.

Additionally, the market regulator floated a consultation paper and a draft circular for recognising ‘specified digital platforms’ with which registered entities will be allowed to associate.

Only those platforms that have a mechanism in place to take preventive as well as curative action to ensure that the platform is not being used to associate with unregistered entities will be recognised.

The platforms will have to implement a mechanism for collaboration with Sebi, possess the ability to identify and analyse content or advertisements related to the securities market to check for possible violations, and take action to prevent fraud, impersonation, false claims, and the presence of entities not recognised or permitted by Sebi to give advice.

Earlier, Sebi officials indicated that the regulator has successfully removed several thousands of misleading links and content from social media platforms, including YouTube and Meta, within 24 hours of the request.