Sebi's Crackdown on Unregistered Financial Advisors: A New Era in Securities Market

The Securities and Exchange Board of India (Sebi) has given registered entities and agents three months to terminate contracts with unregistered financial advisors. This move aims to prevent unauthorized financial advice and ensure market integrity, as part of Sebi's rule amendments. Digital platforms must now meet specific criteria to operate.

Sebi, India's market regulator, has mandated a three-month deadline for registered entities to sever ties with unregistered financial advisors, in a bid to mitigate unauthorized advice and enhance securities market integrity.

The decision follows Sebi's rule amendments in August, promoting a strict stance against entities lacking proper registration. This regulation restricts intermediaries and their agents from associating with unregistered advisory providers, barring those operating via specified digital platforms.

Sebi's guidelines also propose that specified digital platforms utilize AI/ML tools to detect unauthorized activities, while promoting investor education content. Public feedback on these measures is invited until November 12.

(With inputs from agencies.)