In a move to curb misinformation, SEBI tightens regulations on financial influencers and provides new delisting options
Key Points:
- Regulations on Financial Influencers: SEBI restricts its regulated entities from associating with unregistered financial influencers.
- Investor Education Allowed: Associations for investor education are permitted, provided no recommendations or performance claims are made.
- New Delisting Framework: SEBI introduces a fixed price process as an alternative to reverse book building for voluntary delisting.
- FPI Exemptions: Certain funds are exempted from granular disclosures under the Foreign Portfolio Investor framework.
The Securities and Exchange Board of India (SEBI) has approved new regulations to tackle misinformation spread by financial influencers, often referred to as "finfluencers." The move aims to prevent SEBI-regulated entities from associating with unregistered individuals who offer financial advice or recommendations.
Key Regulation Changes:
-Association Restrictions: SEBI-regulated entities, such as mutual funds, stock brokers, and registered investment advisors, are now prohibited from having any direct or indirect financial transactions, client referrals, or information technology interactions with unregistered finfluencers. This ensures that financial advice and recommendations come from credible, regulated sources only.
- Investor Education: While associations for investor education are still allowed, they must not involve any financial advice, recommendations, or performance claims. This condition ensures that educational content is purely informative without misleading investors.
Delisting Framework Adjustments:
- Fixed Price Process: SEBI has introduced a fixed price process as an alternative to the existing reverse book building process for voluntary delisting of companies. This provides more flexibility and options for companies looking to delist from the stock market.
- Investment Holding Companies: An alternative framework has been provided for the delisting of investment holding companies, offering them a streamlined process tailored to their specific needs.
Exemptions for FPIs:
- Disclosure Exemptions: SEBI has granted certain funds exemptions from detailed disclosures under the Foreign Portfolio Investor (FPI) framework. This move aims to simplify compliance for these funds while maintaining transparency in the market.
By implementing these regulations, SEBI aims to enhance market integrity, protect investors from misinformation, and provide more flexible options for companies in the delisting process.