September 2, 2024
New Delhi, India
SEBI
The Securities and Exchange Board of India (SEBI) is set to implement several significant changes to streamline processes and protect investors. At a recent Confederation of Indian Industry (CII) summit, SEBI Chairperson Madhabi Puri Buch announced plans for a single filing system across stock exchanges, the use of artificial intelligence (AI) to expedite IPO approvals, and stricter norms for unregistered financial influencers, or “finfluencers.”
Key Reforms Announced by SEBI:
1. Single Filing Across Stock Exchanges:
Madhabi Puri Buch stated that companies would soon be able to file disclosures with one stock exchange, which would then be visible on the other. For example, a company filing financial results with the National Stock Exchange (NSE) will also have them reflected on the Bombay Stock Exchange (BSE). This move is aimed at reducing redundancy and streamlining the process for listed companies.
2. AI to Speed Up IPO Approvals:
SEBI is planning to leverage artificial intelligence (AI) to accelerate the approval process for initial public offerings (IPOs). Buch noted that SEBI has a dozen AI projects in the pipeline, with half aimed at speeding up the approval process and the other half focused on enhancing supervision. These initiatives are expected to make the regulatory process more efficient and transparent.
3. Stricter Norms for Finfluencers:
SEBI has tightened its regulations on unregistered financial influencers, or “finfluencers,” to protect retail investors from potentially misleading financial advice. The regulator has prohibited entities regulated by SEBI, such as mutual fund houses, research analysts, registered investment advisors, and stock brokers, from partnering with finfluencers who are not registered or authorized by SEBI to provide financial advice.
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New Guidelines for Finfluencers:
- No Association with Unregistered Advisors: SEBI’s new norms prevent regulated entities from any direct or indirect association with unregistered finfluencers, including financial transactions, client referrals, or IT system interactions.
- Content Restrictions: Finfluencers are barred from making recommendations or claiming returns unless registered with SEBI.
- Compliance Requirements: Registered financial influencers must display their registration number, contact information, investor grievance helpline, and appropriate disclaimers on their content.
Kamlesh Varshney, SEBI’s whole-time member, revealed that over 15,000 unregulated finfluencer sites have been removed in the past three months in an effort to protect investors from biased or misleading information.
Additional Announcements:
- ₹250 SIP to Become a Reality: Buch also announced that investors would soon be able to start a systematic investment plan (SIP) for as low as ₹250 per month, broadening access to investment opportunities for small investors.
- Background on Finfluencer Regulation: In June, SEBI introduced initial regulations for unregistered finfluencers, prohibiting regulated entities from engaging with them to safeguard investors from deceptive financial guidance. These measures ensure that all financial influencers operate within a regulated framework.
Implications for the Financial Sector:
SEBI’s new rules aim to enhance market transparency, streamline regulatory processes, and protect retail investors from misinformation. The introduction of a single filing system across exchanges will simplify compliance for companies, while AI-driven IPO approvals could significantly reduce processing times. Meanwhile, the crackdown on unregistered finfluencers is expected to curb the spread of misleading financial content, promoting a safer investment environment for retail investors.
SEBI’s latest measures mark a significant step towards modernizing India’s financial regulatory framework, ensuring greater efficiency, transparency, and investor protection. As these reforms take effect, they could reshape the landscape for market participants, promoting a more robust and trustworthy financial ecosystem.
Disclaimer:
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