Financial influencers ask for clear guidelines from Sebi, bat for certification for creators

Financial influencers are urging for separate certification for them.

The order by Securities and Exchange Board of India (Sebi) against content creator Nasiruddin Ansari also known as Baap of Chart has come as a shock to the financial influencer category which is urging the market regulator to make guidelines clearer for the creators.

Sebi guidelines are not clear when it comes to content creation, said Rajesh Sodhani, a certified financial planner during a panel discussion on the way forward for financial influencers on October 26 in Bengaluru.

"The Sebi consultation paper on the guidelines for financial influencers when it was released 50-70 percent creators were not aware of it," said Super Trader Lakshya told Moneycontrol.

Also Read: Baap of Chart asked to refund over Rs 17 crore in fee, banned from securities market

Sebi had released a consultation paper on August 25, 2023 stating that without registration certificate from the market regulator as Registered Investment Advisor (RIA) and Research Analyst (RA), one cannot give  advice.

"The trading community has evolved in the last 5-6 years. Trading game is changing but rules have not evolved. I don’t think an RA licence is enough to give the right advice," Asit Baran Pati, a professional trader and trainer in future and options.

Sodhani said that there should be two different categories – education and advisory.

"Sebi should create a separate category under RA and RIA (Registered Investment Advisor) for content creators and give them registration opportunities and define the do’s and don’ts for them," said Lakshya.

He added that Sebi should call all the big creators to help them get registered which will bring more credibility to content creation in the finance category. "Content should not be killed. The saviour for retailers as I see is content creation. Experience has more value than a degree. Also, we need at least 10,000 investment advisors and every year at least 1,000-2,000 should get added in the pool," he said.

Currently, there are around 1,300 SEBI registered investment advisors in India. "Those who are certified say it is very stressful and takes a long time. Out of the registered advisors only 250 are active traders. Is that enough to guide the Indians? questioned Lakshya.

He suggested that there can be a separate test for financial influencers. "We need regulation and to regulate the content side, Sebi can keep a check on the frauds when it certifies the right creators. Financial influencers have educated people. Recently, I had also done a poll on YouTube asking who educated them the most after Covid. Around 8,000 people had voted out of which 85 people said creators. Hence, I think the approach should be more collaborative. There is no dialogue with Sebi currently. It should call the top 50 financial influencers and discuss the guidelines," he said.

On the other hand, some financial influencers said that Sebi's latest order highlights the fact that the market regulator wants to point out the bad intention of creators.

Also Read: Baap of Chart lost Rs 3 crore in trading while it was teaching budding traders to generate 'assured' returns

"Influencers think that once they have a following they can exploit it. Sebi is saying that you cannot advise if you do not have an RIA licence. If you are following the guidelines then there is no issue. For educational purposes, if you are charging then it is okay but if you are advising and charging then you will come under Sebi’s scanner if one doesn’t have an RIA licence. While it has come as a shock to many in the financial influencer category, Sebi has taken the right step," said Jegathesan Durairaj, Founder & Mastermind of CapitalZone, a trading workshop.

Arjun Pangu, a SEBI registered investment advisor said that many influencers say they are creating content for educational purposes but then give stock recommendations and this is against Sebi guidelines.

While opinions remain divided in the financial influencer category, the current environment has led to many cutting down on content creation.

"My frequency of making videos has come down since the last many months. Many other creators who used to upload two-three videos a day are now creating only two videos a week. I am even thinking of shifting subject and starting a channel on health," said Lakshya.