The Securities and Exchange Board of India (SEBI) has introduced significant amendments to its regulatory framework. The updated norms aim to tighten oversight over those offering financial advice without formal authorisation, targeting what has been perceived as a growing threat to market stability and investor trust.
SEBI has amended regulations governing depository participants, intermediaries, and securities contracts. The primary objective is to address the burgeoning influence of “finfluencers,” who have been providing unauthorised advice or recommendations related to the securities market. The regulatory body has mandated that no individual or entity regulated by SEBI, or acting as an agent of a regulated person, shall have any direct or indirect association with an unregistered person who provides market-related advice or makes claims concerning stock performance or returns. A senior official from SEBI explained, “This move establishes accountability and reinforces expertise in the sector. By requiring financial influencers to register and adhere to SEBI’s standards, we aim to protect investors from unqualified advice that could lead to substantial financial losses.”
The stock market community, particularly within Dalal Street, has expressed strong support for SEBI’s initiative. Many believe that regulating financial influencers will prevent unregistered individuals from manipulating investor sentiment and eroding market credibility. “The new norms will ensure that mutual fund houses, research analysts, registered investment advisors, and stock brokers are not tempted to partner with unregulated finfluencers,” noted a prominent stockbroker. Over the past few years, finfluencers have significantly impacted the financial decisions of their followers, often without accountability or transparency. SEBI’s revised framework aims to instil a sense of responsibility and ensure that those providing investment advice are qualified and compliant with established guidelines.
Market experts agree that this step will restore confidence among retail investors and curb misleading practices that have become increasingly prevalent in the digital age. By focusing on regulating unregistered market advisors, SEBI intends to create a safer investment environment while enhancing market transparency and integrity. As the amendments come into effect, market participants will need to reassess their affiliations and ensure compliance with SEBI’s enhanced regulatory standards.
