2 weeks ago
SEBI Proposes Common Advertisement Code for Financial Intermediaries
Imagine a big set of rules for telling people about ways to save and invest money.
For a long time, different companies followed different rulebooks, which was confusing.
SEBI, the group that watches over the stock market in India, wants one rulebook for everyone.
The rulebook is about advertisements, which must be fair, balanced and not fool people.
Older rules made companies ask permission before showing an ad, which was slow.
The new plan lets companies show the ad and then report it within 24 hours.
SEBI also wants to stop tricks like fake 'hurry, buy now!'
messages that pressure people into decisions.
Some money experts say the new plan is a good step but still has problems.
They think companies should be trusted more and checked later, and that some sellers are still left out of the rules.
SEBI's consultation paper, issued on June 23, proposes a Common Advertisement Code replacing fragmented, entity-specific advertising rules for financial intermediaries.
The Code would cover brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers, and mutual funds.
It shifts from prior approval to post-issuance reporting, with every advertisement reported to the supervisory body within 24 hours of issuance.
The proposal adopts the Central Consumer Protection Authority's 2023 guidelines on dark patterns and permits celebrity endorsements at the entity or brand level, subject to prior approval.
Critics say the universal 24-hour filing shifts rather than reduces the compliance burden, and that mutual fund distributors fall outside the Code's scope.
- Who
- SEBI (Securities and Exchange Board of India), India's securities market regulator, which issued the consultation paper; the Code would apply to registered intermediaries such as brokers, mutual funds, investment advisers, research analysts, portfolio managers, depository participants, and online bond platform providers.
- What
- A proposed Common Advertisement Code that would unify fragmented advertising rules for financial intermediaries and shift oversight from prior approval to post-issuance reporting.
- Where
- India's securities market (the regulator is the Securities and Exchange Board of India).
- When
- June 23, when the consultation paper was issued (year not specified in the article).
- Why
- Because advertising now reaches investors through social media, podcasts, webinars and trading apps at a speed and scale older codes never anticipated, and existing codes created overlapping obligations and inconsistent interpretation.
SEBI's Position
Critic's Position (Finsec Law Advisors)
Advertising approval process
SEBI's Position
Post-issuance reporting within 24 hours replaces a slow prior-approval model built for low-volume traditional advertising, allowing timely communication without measurably hurting investor protection.
Critic's Position (Finsec Law Advisors)
Universal 24-hour filing merely moves the compliance burden after publication, so a more proportionate design would rely on internal approval, governance standards, and periodic or risk-based supervisory review.
Celebrity endorsements
SEBI's Position
Celebrities may endorse at the entity or brand level, which is a liberalisation, with prior approval retained and a broadly defined celebrity category to protect investors.
Critic's Position (Finsec Law Advisors)
The rule attaches to who is speaking rather than what is said; the five-lakh-follower line invites workarounds, and prior approval should carry a defined timeline with deemed approval on failure.
Scope of the Code
SEBI's Position
A single common code anchored in the Intermediaries Regulations harmonises rules for all covered registered intermediaries.
Critic's Position (Finsec Law Advisors)
Mutual fund distributors, who register with the industry association and not with SEBI, fall outside the Code, so the fragmentation the Code was drafted to remove partly remains.
Key facts
- Regulator
- SEBI (Securities and Exchange Board of India)
- Proposal
- Common Advertisement Code for regulated financial intermediaries
- Legal basis
- A new chapter in the SEBI (Intermediaries) Regulations, 2008
- Consultation paper date
- June 23 (year not specified in the article)
- Reporting requirement
- Every advertisement reported to the supervisory body within 24 hours of issuance
- Intermediaries covered
- Brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers, mutual funds
- Celebrity threshold
- More than five lakh followers on a single social media handle (one of eight celebrity categories)
- Dark patterns
- Borrows the Central Consumer Protection Authority's 2023 guidelines, treating false urgency and subscription traps as advertising failures
Sources
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