Policy Watch
SEBI Cracks Down on Finfluencers, Bans Use of Live Stock Prices in Education
The Securities and Exchange Board of India (SEBI) has dealt a major blow to financial influencers, commonly known as finfluencers, by banning the use of live market prices in stock market education. Under the new regulation, educators can only use stock prices with a three-month lag, effectively preventing them from offering real-time trading advice under the guise of education.
In a circular issued late on January 29, SEBI clarified its stance on registered entities associating with individuals engaged in prohibited activities. This move follows its October 22, 2024, circular, which had already restricted ties between registered financial firms and unregistered finfluencers. The new directive aims to curb illegal investment advisory services that operate under the pretense of stock market education.
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By prohibiting real-time market demonstrations, SEBI is set to dismantle a significant revenue stream for many finfluencers. Without the ability to give stock tips or trading calls during live market hours, these influencers are likely to lose their subscribers, who often pay for actionable insights.
Additionally, SEBI has made it clear that registered financial entities cannot associate with finfluencers in ways that involve direct or indirect compensation, including advertisements or promotions.
While investor education itself is not banned, SEBI insists that educators must refrain from making investment recommendations or performance claims unless they are registered with the regulatory body. The circular explicitly states that educators should not use stock market price data from the preceding three months when discussing securities. This includes direct mentions, code names, or visual representations in videos, tickers, or screen shares. With this move, SEBI aims to protect retail investors from misleading financial advice, ensuring that only registered professionals provide legitimate investment recommendations in India’s stock market.
