Sebi Tightens Grip on Financial Advisory Partnerships

The Securities and Exchange Board of India (Sebi) has introduced a framework to regulate associations between market intermediaries and unauthorised financial advisors, particularly via digital platforms. The framework requires registration and authorization for providing investment guidance or performance claims, ensuring investor protection and maintaining market integrity.

The Securities and Exchange Board of India (Sebi) took a significant step on Tuesday, revealing a new framework concerning the relationship between market intermediaries and unauthorised financial advisors, with a focus on digital platforms.

In a move following rule amendments from August, Sebi addressed associations between intermediaries such as stock exchanges, clearing corporations, and entities offering financial advice or performance claims. The new rules prohibit any direct or indirect affiliations with entities that provide investment advice or performance claims without Sebi's authorization.

While interactions through designated digital platforms are permitted, these platforms must demonstrate robust preventive measures. They must assure Sebi of preventing unauthorized advice to protect investors and maintain market integrity. A notable exemption applies to those solely involved in investor education, with intermediaries given a three-month deadline to cut ties with unauthorized advisors.

(With inputs from agencies.)