Sebi moots badges for registered entities on digital platform that facilitates association with regulated players

The deadline for submission of public comments and suggestions for this consultation paper is November 12, 2024.

The digital platform, through which regulated entities such as brokerages can associate with third parties such as content creators or finfluencers, may need to have a verified label/badge system to identify Sebi-registered entities and their agents.

In a consultation paper released on October 22, the Securities and Exchange Board of India (Sebi) has released the framework that would govern the "specified digital platform" through which regulated entities can associate with third-parties such as finfluencers.

Among the many requirements, the platform may need to have a policy of information-sharing with Sebi and have a policy that allows only content and advertisment from Sebi-registered or recognised entities.

Also read: Sebi asks all regulated entities to terminate contracts with unregistered advisors within three months

The deadline for submission of public comments and suggestions for this consultation paper is November 12, 2024.

The framework has been proposed following the amendments made to Sebi regulations that restrict the association of registered entities with unregistered entities.

According to the consultation paper, these restrictions do not apply if the association is through a digital platform which has the ability to take preventive and curative action to ensure that the association in line with the Sebi regulations.

The paper suggests a framework to govern such a platform.

Some of the requirements the platform may have to meet are as follows:

The platform should have a system to provide verified label or badge to SEBI registered persons to enable users to distinguish between SEBI registered entities and unregistered entities and to allow it to flag for further scrutiny to bring down content/advertisement by unregistered entities.

The platform should have a laid down policy to the satisfaction of SEBI to share the information and data, specific or aggregated, related to securities market on their platform with SEBI when asked for and to act on the information and inputs received from SEBI.

For the entities providing content and/or advertisement related to securities market, platform should have a policy that it shall allow only -

a) An intermediary/entity registered/recognised by SEBI and their agents to provide content and/or advertisement related to securities market, or

b) A person or an entity or content and/or advertisement which is exempted under any regulations issued by SEBI, or

c) A person who provides/posts/reposts/creates the content and/or advertisement related to securities market exclusively for the purpose of investor education provided the person does not provide any advice or recommendation, directly or indirectly or makes any claim, expressly or impliedly, of return or performance, and does not direct to avail any product or services in respect of or related to security or securities (including related services).

(This copy will be updated.)