The Securities and Exchange Board of India (SEBI) has introduced strict measures to regulate financial influencers, commonly known as “fininfluencers.”
Under the new rules issued on January 29, 2025, SEBI has restricted the use of live stock market data for education purposes.
Stock market educators can now only use data that is at least three months old. This move aims to curb the influence of individuals who mislead investors under the guise of education.
Key Features of SEBI’s New Rules
Restrictions on Real-Time Data Usage
SEBI has mandated that educators cannot show or discuss stock prices, names, or codes less than three months old.
The use of real-time price data to make investment recommendations is strictly prohibited.
This ensures that individuals engaged in stock market education do not cross into unauthorized advisory activities.
Prohibition of Unauthorized Advisory
SEBI clarified that genuine education should not include any form of direct or indirect investment advice.
Unregistered individuals cannot provide stock market guidance or predictions, even if they label it as “education.”
Additional Highlights from the Circular
No Uncertified Investment Advice: Only SEBI-registered professionals can offer stock market advice.
False Promises Forbidden: Claims of guaranteed returns or assured profits are not allowed unless authorized by SEBI.
Accountability for Companies: Financial institutions working with misleading fininfluencers will also face penalties.
Transparent Advertising: SEBI-registered entities cannot collaborate with fininfluencers for promotional deals.
Ban on Secret Transactions: Referral deals, secret payments, and unauthorized data sharing are prohibited.
Penalties for Violations: Non-compliance can result in fines, suspension, or cancellation of SEBI registrations.
These rules came into effect on August 29, 2024, with companies required to comply fully by January 2025.
Impact on Fininfluencers and the Industry
SEBI’s decision has significant implications for social media-based fininfluencers who relied on live stock market updates and trading tips to build their following.
The ban on real-time data usage means fininfluencers can no longer provide unauthorized advice under the guise of education.
To comply with these rules, fininfluencers must either register with SEBI or shift their content strategy entirely.
This is likely to affect their popularity, especially among investors seeking instant stock tips.
Why Did SEBI Take These Steps?
The rise of fininfluencers on platforms like YouTube, Instagram, and Telegram has led to concerns about unregulated investment advice.
Many fininfluencers mislead small investors by selling stock tips through paid memberships, courses, and private groups.
SEBI’s strict action aims to protect investors, eliminate misleading practices, and maintain transparency in the financial markets.
