Regulator takes steps to regulate fininfluencers and curb speculative bets
The capital markets regulator Securities and Exchange Board of India (SEBI) has taken significant steps to enhance investor protections at its board meeting yesterday. The watchdog approved a framework to regulate the growing phenomenon of financial influencers, also known as ‘fininfluencers', amid concerns about potential risks.
SEBI Chairperson Madhabi Puri Buch highlighted her worries about the macroeconomic impact of increased speculative trading in the futures and options (F&O) segment by retail investors. She said many people are using loans and depleting their savings to make such high-risk bets. In response, SEBI has formed a panel of experts to study this issue and make appropriate recommendations.
On fininfluencers, the new rules bar regulated entities like brokers from associating with unregistered individuals providing financial advice. This aims to restrict inappropriate promotion that could mislead investors. Fininfluencers usually work on commission, so their impartiality was a cause for concern. Under the framework, only properly registered Investment Advisers and Research Analysts can charge fees for their services.
In other decisions, SEBI is looking to further tighten surveillance against market abuse. Daily settlement in the ‘T+1' format for certain stocks was also successful according to the Chairperson. Overall, the market authority seems committed to boosting transparency while reining in risks for small investors. The new measures seek a balanced approach to enable orderly market functions.
