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Informist, Tuesday, Jun. 23, 2026

 

--SEBI issues consultation paper on common advt code for regulated entities 

MUMBAI – The Securities and Exchange Board of India Tuesday issued a consultation paper which aims to roll out a common advertisement code for regulated entities and create a technology-enabled compliance architecture. Currently, advertisements by different SEBI-regulated entities are governed by different supervisory bodies and multiple regulatory frameworks. The move towards a common advertisement code could improve investor protection and ensure regulatory consistency, SEBI said. 

 

The regulated entities include stockbrokers, depository participants, investment advisers, research analysts, online bond platform providers, portfolio managers, and mutual funds.

 

Advertisements made by companies registered with SEBI under multiple entities simultaneously may require approvals from multiple authorities, resulting in operational inefficiency, SEBI said. Secondly, regulated entities publish several advertisements on social media, and subjecting each item to prior approval is inefficient. Delays in obtaining prior approval may also erode the topical relevance of advertisements with time-sensitive content and render them ineffective, the market regulator said. Third, smaller regulated entities face increased compliance costs due to the prior approval process. 

 

SEBI has therefore proposed replacing the prior approval system with a post-issuance reporting model, in which reports will be due within 24 hours of an advertisement's issuance. "Prior approval process is often manual and may sometimes lead to potential delays, which may hamper legitimate business activities. Notably, the mutual fund industry has long operated on a post-issuance reporting model," SEBI said.

 

Different entities also have different regulations regarding celebrity endorsements. SEBI has proposed permitting all specified regulated entities to engage celebrities to promote their brands. However, SEBI said celebrity endorsement will be restricted to the regulated entity at the brand level only, and it will not allow celebrities to endorse products or services. Currently, stockbrokers, investment advisers, and research analysts are prohibited from running advertisements with celebrity endorsements. 

 

SEBI has also proposed permitting specified regulated entities to use ratings and rankings assigned by the Past Risk and Return Verification Agency in advertisements. Additionally, the market regulator said entities will have to clarify whether the content of the advertisement is purely educational or investor-awareness oriented. "The present codes have created ambiguity about whether general financial literacy content constitutes an 'advertisement.' This discourages regulated entities from contributing to the broad SEBI/government objective of investor education," SEBI said. The consultation paper also mandates that entities provide an illustrative list of communications that are not to be considered advertisements, provided that such communications do not contain any promotional, persuasive, or solicitation-oriented content.

 

The consultation paper also proposes a ban on 'dark patterns.' Some of these dark patterns include false urgency, forcing a user to take an action that requires them to buy additional goods or subscribe to or sign up for an unrelated service, and 'subscription traps.' SEBI said that making the cancellation of a paid subscription impossible, making it a complex and lengthy process, or hiding the cancellation option for a subscription constitutes a subscription trap. 

 

On the implementation side, the common advertisement code is proposed to be implemented through amendments to the SEBI (Intermediaries Regulations), 2008, which govern specified regulated entities, and by issuance of operational circulars. A centralised digital advertisement reporting system will be developed by supervisory bodies, through which all regulated entities can upload their advertisements or provide a link to them, SEBI said. In the case of multiple supervisory bodies for a regulated entity, a common platform accessible to all relevant supervisory bodies will be developed for submitting advertisements.

 

Among other implementation norms, supervisory bodies will also have to develop systems and processes to monitor advertisements reported to them by regulated entities as per the specified policy, and to report to SEBI any violation of the provisions of the common advertisement code. SEBI may take actions such as issuing directions to withdraw advertisements, refrain from issuing advertisements, stop onboarding new clients, and impose monetary penalties on companies that violate the code. Comments and suggestions on the draft common advertisement code can be submitted by Jul. 14, SEBI said.  End

 

Reported by Eshitva Prakash

Edited by Saji George Titus

 

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