The Securities and Exchange Board of India (SEBI) has initiated a comprehensive review of its regulatory framework governing stock exchanges, clearing corporations and commodity derivatives exchanges to promote ease of doing business and reduce compliance burden in the securities market. According to ANI, the review is aligned with SEBI's vision of "optimal regulation" and aims to simplify regulatory requirements, eliminate obsolete provisions and rationalise reporting obligations for market infrastructure institutions. The exercise involves a detailed review of the Master Circular for Stock Exchanges and Clearing Corporations as well as the Master Circular for Commodity Derivatives, with the regulator undertaking the review through a consultative process involving stakeholders from across the market ecosystem. The proposed changes could reduce the size of the Master Circular for exchanges by nearly 50 per cent, while other measures include discontinuation of several reports currently submitted to SEBI, with oversight responsibilities proposed to be shifted to MII committees or addressed through public disclosures.
Capital markets regulator Sebi has proposed a common advertisement code for a wide range of regulated entities, including stock brokers, mutual funds, investment advisers and portfolio managers. According to reports from The Economic Times, the proposed framework will cover stock brokers, depository participants, investment advisers, research analysts, portfolio managers, mutual funds and asset management companies, online bond platform providers and any other entities notified by Sebi. This comprehensive approach aims to simplify regulations while strengthening investor protection across the financial services sector. In a consultation paper released on Tuesday, public comments have been invited till July 14, with the regulator proposing to replace multiple advertisement guidelines with a single framework applicable to specified Sebi-regulated entities. The code is intended to standardise disclosures, strengthen investor protection, enable technology-driven post-issuance monitoring and improve ease of doing business through streamlined compliance. As per Moneycontrol, the proposal aims to create a uniform regulatory framework for investor-facing advertisements while strengthening investor protection and easing compliance across the securities market.
As part of the comprehensive exchange regulation review, SEBI has proposed issuing a separate Master Circular for clearing corporations and a separate consolidated circular covering common information technology-related provisions for Market Infrastructure Institutions (MIIs). According to ANI, the regulator has also proposed ending the requirement for registration of investment managers to provide Direct Market Access facilities and introducing a single-window registration mechanism for brokers offering Smart Order Routing services. Additional technology-focused proposals include a review of the system and network audit framework for MIIs, withdrawal of Close to Money norms for options in goods, clearer allocation of responsibilities for monitoring position limits, revision of the client code modification framework, liberalised norms for liquidity enhancement schemes and merger of investor protection funds across equity and commodity segments. The revised Master Circular for exchanges will be issued after considering public feedback on the consultation papers, with comments on the fourth consultation paper on trading software and technology for exchanges open until July 13, 2026.
One of the most significant changes proposed is permitting celebrities to endorse the brand or entity of Sebi-regulated firms, subject to prescribed conditions and prior regulatory approval. As reported by The Economic Times, however, celebrities will not be allowed to endorse specific financial products or services, as Sebi believes such endorsements could unduly influence investor decisions. The regulator noted that allowing brand-level endorsements would help regulated entities improve visibility and promote financial inclusion while maintaining safeguards against misleading promotions. Under the proposed framework, celebrity endorsements would be permitted only at the regulated entity's brand or corporate level, subject to appropriate disclaimers. At present, celebrity endorsement is permitted at the industry level in AMCs with prior approval from Sebi. The consultation paper also proposes allowing regulated entities to use ratings and rankings in advertisements, provided they are assigned by a Past Risk and Return Verification Agency (PaRRVA). According to Moneycontrol, advertisements featuring celebrities would continue to require prior approval from the relevant supervisory body, with the regulator explaining that while a brand endorsement merely reflects a general association with the entity, endorsement of a particular product or service may unduly influence investors' decisions by creating perceptions regarding its suitability or expected outcomes.
The proposed common code seeks to replace the fragmented regulatory framework currently applicable to different intermediaries, which often requires multiple approvals from different regulators and exchanges for similar advertisements. According to The Economic Times, the new framework aims to reduce compliance costs, particularly for smaller entities such as independent investment advisers and research analysts, while ensuring that advertisements remain fair, transparent and not misleading. The regulator said the proposals are intended to promote ease of doing business, improve regulatory consistency across intermediaries and strengthen accountability through a technology-enabled post-issuance monitoring mechanism. Under the proposed framework, entities registered in multiple capacities often face overlapping compliance requirements across exchanges and Sebi regulations, leading to duplication of approvals and operational inefficiencies. To strengthen oversight, supervisory bodies would establish a centralised advertisement reporting portal to monitor compliance and report violations to SEBI. The regulator may initiate summary proceedings or direct supervisory bodies to act, including withdrawal of advertisements, restrictions on onboarding new clients, monetary penalties or other measures permitted under applicable regulations. The Common Advertisement Code would be implemented through amendments to the SEBI (Intermediaries) Regulations, 2008, other applicable regulations and operational circulars, with a six-month transition period for implementation.
The draft code prescribes broad principles for advertisements, requiring them to be truthful, balanced, easy to understand and supported by adequate disclosures. It prohibits false or misleading claims, exaggerated testimonials, promises of guaranteed or risk-free returns, unfair comparisons, misuse of SEBI's name or logo, and any suggestion that past performance will necessarily recur. According to Moneycontrol, SEBI has also proposed that regulated entities refrain from using dark patterns in advertisements and digital communications in line with the Central Consumer Protection Authority's 2023 guidelines. 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. These include investor awareness material, responses to specific client queries, festive or seasonal greetings, communications issued pursuant to regulatory requirements, and announcements of sponsorships without accompanying promotional claims. SEBI has also proposed a ban on 'dark patterns' including false urgency, forcing users to take actions requiring additional purchases, and subscription traps where cancellation is made impossible or complex. The regulator clarified that content which is purely educational or investor-awareness oriented and carries no promotional intent for the products or services of a regulated entity will not be treated as an advertisement.
