SEBI Introduces Regulations For Finfluencers Amid Growing Concerns

The capital market regulator and watchdog, Security and Exchange Board of India (SEBI), on Thursday, has taken a significant step and approved norms to regulate unregistered financial influencers, commonly known as finfluencers amid growing concerns about potential risk they pose.

These unregistered finfluencer, who often operate on a commission-based model, have been known to offer biased or misleading financial advice.

New Rules for Finfluencers

The capital market regulator, to eliminate these risk has also approved new norms that will restrict associations between its regulated entities and unregistered individuals.

According to SEBI, entities regulated by the Board, such as mutual funds, stock brokers, research analysts, or registered investment advisors, cannot engage in any form of association with unregistered finfluencers.

This includes financial transactions, referrals, or any form of collaboration that involves money or information technology systems.

However, SEBI has allowed room for investor education initiatives involving finfluencers, provided they do not make any recommendations or claims about returns or performance.

Changes in Delisting

In addition to regulating finfluencers, the market regulator has introduced changes to the delisting process of frequently traded shares.

A fixed price process will now be an alternative to the existing reverse book building method. This change will simplify and add flexibility to the delisting framework, particularly for Investment and Holding Companies (IHCs).

Furthermore, SEBI has also granted certain funds exemptions from granular disclosures under the Foreign Portfolio Investor (FPI) regulations.

In addition, SEBI has decided to remove financial disincentives for Managing Directors (MDs) and Chief Technology Officers (CTOs) of exchanges and other Market Infrastructure Institutions (MIIs) in the event of technical glitches.