Sharan Hegde says finance creators, brand deals will shrink as Sebi curbs use of live stock prices

Sharan Hegde

The Securities and Exchange Board of India (Sebi), on January 30, clarified that people who provide stock market education will need to use stock price charts with a three-month lag and financial influencer Sharan Hegde thinks this as a very big disruption in the influencer industry.

Hegde's 1% Club recently received a Sebi-registered Investment Adviser (RIA) licence, which will allow them to offer investment products like stock recommendations, small cases, and high-yielding debt solutions.

Also read: SEBI delivers deathblow to finfluencers, stops running unregistered advisories under garb of education

"People who talk about trading and stocks present their screen and show live data which is not older than 24 hours. If it is more than three-month old, nobody would want to watch it as the stock market is so dynamic. So, I think it will be really challenging. I think this is Sebi's way of forcing people to get registered," he said.

Also read: Financial influencers to see drop in brand deals and value as SEBI curbs use of live stock prices

Blow to brand deals

Hegde added that if there are like 1,000-odd people creating content on finance in India today, that number is going to shrink rapidly. The few people who will remain will be those who are registered, he said.

"There will not just be lesser competition. But it is a higher barrier to entry. So, this will become a very closed circle of people," he said.

Brand deals will reduce, if they (financial influencers) are not Sebi-registered.

People like me who don't really talk about stock market prices are going to be unaffected. In our 1% Club, the only person who will be affected is someone like Shashank Udupa, whose YouTube channel is about talking about how the market is doing," Hegde said.

Need more clarity

However, Hegde pointed out more clarity is needed on some aspects.

"Sebi has not given any clarity on platforms other than social media. For example, if I am able to bring people, let's say on a Zoom platform or if I am able to talk to them on email, that's my own distribution. That's not social media. What is the restriction on that? Nobody knows," he said.

"What about TV channels? A TV anchor who is talking about stock market prices... how do we look at that? Are they influencers or not?" he asked.

Also read: MC Explains: How SEBI decisively ends brokerages' romance with finfluencers

"A company's own YouTube channel, for example, Zerodha's YouTube channel. Now, the person who is presenting on that channel might not be self-registered. Is that person also supposed to be self-registered? I don't know. So, these are question marks in my head. There are still a lot of grey areas Sebi have to address," Hegde said.

Hegde also weighed in on the concerns Research Analysts (RAs) have, regarding compliance with Sebi's regulations, like capping of annual fees and not taking more than three months of fees in advance.

Stricter rules

"It is getting difficult, I won't deny. It's just getting harder and harder to create a viable business model under these rules. I'm sure Sebi has its own good reasons to impose this. But I'm just talking from an entrepreneur's perspective. If you have to invest and take risk in building a big business with these sorts of rules, the risk factor goes up," said Hegde.

"Entrepreneurship is anyway hard. If a country is increasing the risk of entrepreneurship, it's probably going in the wrong direction because more people will not be able to take that risk," he added.

In the interest of making a particular business safe, they might make it completely impossible to even start that business, he added.

Also read: Sharan Hegde's 1% Club is the first to get SEBI’s Investment Advisor licence amid clamp down on finfluencers

Year of AI agents

Hegde's colleague Raghav Gupta, co-founder of 1% Club, pointed out that they are realising that this is the year of AI (artificial intelligence) agents. "Across all our verticals, all our businesses, we will embrace AI agents to ensure that customer experience is top-notch. AI agents will be the best way for us to do so."

He added that currently AI is mostly a productivity hack.

"It's about a 15-20 percent productivity hack. But, as we are going forward, we are realising a lot of workflows. Their frequency can increase. So, if a person is serving a customer four times in a month, the AI agents can service the same customer 16 times in a month. This is what we are working towards. We have not done it. It's still in the pilot stage. And one cannot roll out anything before checking with the regulator and the legal team. But I am certain that this year will be the year of AI agents," Gupta said.