SEBI Plans Single Ad Code For Brokers, AMCs, Advisors; May Allow Celebrity Endorsements

The Securities and Exchange Board of India (SEBI) on Tuesday released a consultation paper proposing a single advertising framework for a wide range of regulated entities operating in the capital markets ecosystem.

The proposed Common Advertisement Code seeks to replace multiple advertisement guidelines currently applicable across intermediaries with one uniform framework.

The regulator said the proposal is aimed at improving regulatory consistency, reducing the compliance burden and strengthening investor protection through common disclosure and advertising standards.

Will SEBI Allow Celebrity Endorsements For Financial Firms?

Under the proposal, regulated entities such as stock brokers, mutual fund houses, portfolio managers, investment advisers and research analysts may be allowed to engage celebrities for brand promotion.

However, the permission would be limited to promoting the entity's brand or corporate identity.

Celebrities would not be permitted to endorse specific investment products, schemes or services offered by regulated entities.

SEBI said any such advertisements would have to comply with prescribed conditions and disclosure requirements.

At present, celebrity endorsements are permitted only at the mutual fund industry level, subject to prior approval from the regulator.

The proposal forms part of a broader effort to create a common advertising framework across different categories of market intermediaries.

What Changes Has SEBI Proposed For Advertisement Approvals?

One of the biggest changes relates to how advertisements are reviewed.

SEBI has proposed replacing the current prior-approval requirement applicable to stock brokers, Online Bond Platform Providers (OBPPs), investment advisers and research analysts with a post-issuance reporting mechanism.

Under the proposed system, advertisements would be reported to the relevant stock exchange or SEBI-recognised supervisory body within 24 hours of publication.

Monitoring would take place after issuance instead of before publication.

According to SEBI, entities registered in multiple capacities often have to obtain approvals from several authorities for the same advertisement, creating operational inefficiencies.

The regulator also pointed to the growing use of digital communication channels.

It noted that regulated entities now publish large volumes of social media posts, educational reels and promotional content every day, making prior approval less practical for time-sensitive communication.

SEBI said technology-enabled post-issuance monitoring could improve oversight while simplifying compliance requirements.

What Other Changes Are Included In The Proposed Advertisement Code?

The consultation paper also proposes allowing regulated entities to use ratings and rankings in advertisements if they are assigned by a Past Risk and Return Verification Agency (PaRRVA).

Under the framework, rankings would need to be based on studies or surveys covering all relevant participants within a category. Advertisements would also have to disclose the methodology used or provide a link directing investors to detailed information.

SEBI further proposed simplified disclosures for short-format digital advertisements such as SMS messages, push notifications and pop-up advertisements where space limitations make full disclosures difficult. In such cases, a hyperlink to complete risk disclosures would be mandatory.

The regulator clarified that purely educational or investor-aware content that does not promote a product or service would remain outside the scope of the advertisement code.

It has also proposed restrictions on the use of dark patterns in advertisements by regulated entities and online platforms.

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The Common Advertisement Code is proposed to apply across stockbrokers, depository participants, mutual funds, asset management companies, portfolio managers, investment advisers, research analysts and Online Bond Platform Providers.

According to SEBI, the framework is intended to create uniform standards for disclosures, risk warnings and prohibited claims while making compliance processes more efficient. The market regulator has invited public comments on the proposal until 14 July.

Source:

CNBC TV18