Mumbai, June 23: The Securities and Exchange Board of India (SEBI) has proposed the implementation of a Common Advertising Code (CAC) for various regulated entities in the capital market. This initiative aims to create a unified framework by eliminating the disparate advertising rules currently in place, thereby reducing compliance complexities and enhancing investor protection.
The proposed regulations will apply to stock brokers, depository participants, investment advisors, research analysts, online bond platform providers, portfolio managers, and mutual fund and asset management companies. It is suggested that this new framework be incorporated into the SEBI (Intermediaries) Regulations, 2008.
SEBI has recommended abolishing the existing requirement for pre-approval of advertisements, suggesting instead a post-reporting system. Under this system, any advertisement must be reported to the regulator within 24 hours of its release.
According to SEBI, financial institutions publish a significant number of social media posts, educational videos, and promotional materials daily in the digital age. Thus, obtaining prior approval for every piece of content is impractical. Public feedback on this proposal is invited until July 14.
Under the new proposal, regulated entities may be allowed to include celebrities in brand or institutional promotions. However, celebrity endorsements for specific financial products or services will not be permitted, aiming to protect investors from misleading claims.
SEBI’s proposal to implement a Common Advertising Code seeks to eliminate the varied advertising rules of different institutions and exchanges. This will create a uniform regulatory framework across the financial sector, making compliance easier for entities.
The regulator has also proposed that institutions be allowed to promote ratings and rankings issued by the Past Risk and Return Verification Agency (PARRVA). Compliance with specified conditions and disclosures will be mandatory. SEBI believes this will enhance transparency and provide better information to investors while curbing misleading claims.
To eliminate confusion between investors and institutions, SEBI intends to redefine advertising. The proposed amendment will clearly distinguish between promotional messages and general investor service communications, along with providing an illustrative list of communications that will not be classified as advertisements.
Additionally, SEBI has proposed developing a shared digital portal to streamline advertising reporting. This portal will be operated by recognized supervisory bodies, simplifying the reporting process for registered entities across multiple regulatory institutions while facilitating oversight for regulators.
According to SEBI, the proposed Common Advertising Code aims to promote ease of doing business while safeguarding investors’ interests.
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