By Jayshree P Upadhyay
MUMBAI (Reuters) -India’s market regulator on Thursday asked brokers and mutual funds to stop using the services of unregulated financial influencers for marketing and advertising campaigns.
A booming Indian stock market has increased the popularity of so-called financial influencers who advise on stocks and other related investments through their channels on YouTube and Instagram and often have a large number of followers.
The decision was taken to address concerns related to “certain persons, including unregulated entities, inducing investors to deal in securities based on inappropriate claims,” the Securities and Exchange Board of India (SEBI) said in a press statement issued after a board meeting.
It, however, added that financial influencers engaged in investor education will be exempt from the new restrictions.
India had 154 million trading accounts as of April 2024, according to SEBI data, a more than four times jump from the 36 million trading accounts in April 2019.
It will be the responsibility of the regulated entity to ensure that individuals with whom it is associated do not breach the rules of conduct set by the SEBI, including avoiding the promise of assured returns.
The regulator also introduced new criteria to decide on stocks that can be linked to derivative products, such as futures and options, as proposed in a discussion paper earlier this month.
The total number of stocks eligible for derivative trading will rise marginally, SEBI Chair Madhabi Puri Buch said at a press briefing.
EASIER DELISTING
The regulator’s board also approved changes to delisting rules that would make it easier for companies to exit from stock exchanges.
Companies can now offer their shareholders fixed prices for shares as an alternate mechanism to delist from stock exchanges.
Currently, delisting is carried out via reverse book-building, in which shareholders place offers for the price at which they would sell securities back to large shareholders, who can influence company policy.
The fixed price must be at least 15% above a floor price and will be determined by rules set by the regulator.
(Reporting by Jayshree P. Upadhyay; Writing by Ira Dugal; Editing by Sohini Goswami and Anil D’Silva)
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