The Securities and Exchange Board of India has proposed a common advertisement code for specified regulated entities (REs), seeking to establish uniform standards for advertising and promotional communications across the securities market ecosystem.
In a consultation paper released on June 23, the market regulator said the proposal is intended to harmonise existing advertising requirements that currently vary across different categories of regulated entities. The objective is to ensure that advertisements are fair, transparent and not misleading, while strengthening investor protection.
The proposed framework would apply to a wide range of entities regulated by SEBI, including stock exchanges, clearing corporations, depositories, mutual funds, asset management companies, stock brokers, merchant bankers, portfolio managers, investment advisers, research analysts, alternative investment funds and other market intermediaries.
Under the draft code, advertisements must be accurate, balanced and capable of being substantiated. Regulated entities would be prohibited from making statements that are misleading, exaggerated or likely to create unrealistic expectations among investors. Promotional material would also need to clearly disclose risks and avoid presenting past performance as indicative of future returns.
SEBI has proposed that advertisements should not contain testimonials, rankings or endorsements that could mislead investors, and must avoid unfair comparisons with competitors. The regulator has also outlined provisions governing digital advertising, influencer-led promotions and communications distributed through social media platforms.
According to the consultation paper, a common code would help streamline compliance requirements, promote consistency in investor-facing communication and reduce regulatory arbitrage across different categories of market participants.
SEBI has invited public comments on the proposal before finalising the framework.
