The Securities and Exchange Board of India (SEBI) has taken a strong stance against financial influencers (“finfluencers”) by restricting their use of live stock market data in educational content. In a circular issued on Wednesday evening, Sebi clarified that stock market educators can only use stock prices with a three-month delay, effectively preventing them from giving real-time trading advice under the guise of education. The rule specifies that individuals engaged in education should not display or discuss stock prices or securities data from the past three months in any form that suggests future price predictions, investment advice, or recommendations.
This move is aimed at stopping the widespread practice of finfluencers running illegal advisory services without Sebi registration. The regulations also prohibit associations between registered market entities and unregistered finfluencers, which Sebi had initially restricted in its October 2024 circular. The latest update, which comes into effect on August 29, 2024, tightens these regulations further.
Boost Your Business with SME IPO Funding Strategies – Enroll Now
Key provisions of the new circular include: educators are barred from using live stock prices, with only historical data from the past three months allowed; registered market entities cannot engage with finfluencers through monetary or non-monetary compensation; investor education is permitted, but educators must refrain from providing investment advice or making performance claims unless approved by Sebi; and educators cannot use stock names, codes, or price data in a way that implies investment advice.
Entities found violating these rules will face penalties, suspension, or the cancellation of their Sebi license. Sebi emphasized that it is the responsibility of regulated entities to ensure compliance by any associated individuals or agents.
The surge of finfluencers on social media has made it increasingly difficult for the public to differentiate between genuine financial education and misleading advice. With this new regulation, many finfluencers who rely on real-time market speculation for their business model are likely to face challenges in retaining subscribers and clients.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
