SEBI: Tweaking the advertising rules on market financial products | Photo Credit: bl-online Administrator

For long, financial firms and intermediaries dealing in market-related products have been subject to archaic, restrictive advertising rules. Many of these rules, such as the requirement of prior approval of every advertisement by the stock exchange or Securities and Exchange Board of India (SEBI), introduce unnecessary red tape into a normal commercial activity.

Other mandates, such as prohibiting the use of celebrities in product advertisements, result in a skewed playing field with other financial products, where such promotions are freely allowed. SEBI-regulated entities such as stock brokers, mutual funds, research analysts, investment advisers and online bond platforms are subject to disparate rules. In this light, SEBI’s ongoing public consultation process to institute a common advertising code for all market entities is welcome. Along with harmonisation and simplification of rules, SEBI also seeks to give the advertising code statutory heft by incorporating it into the SEBI Intermediaries Regulations, 2008.

There are quite a few positive aspects to the proposed Common Advertisement Code. One, the code adopts an exhaustive definition of the term advertisement by covering digital media, apart from print, broadcast and outdoor media. This brings influencer marketing and digital promotions through reels and videos within the ambit of the Code. Two, it waives the prior regulatory approval requirement for all advertisements and seeks market players to file their ads with the regulator or exchange, post facto. This is a pragmatic move as every digital ad goes through multiple iterations. Three, permitting celebrity endorsements at the brand/entity level, but not to plug specific products or services, is a good compromise. In a situation where real estate and gold use celebrity endorsements, preventing market products from using them seems unfair. At the same time, the unsavoury history of Sahara and PACL suggests that celebrity endorsements can prompt the public to ignore risks.

On the flip side, the Code attempts a very specific definition of the term ‘celebrity’ (lead actors in mainstream media, national-level sportspersons, social media influencers with five lakh plus followers etc). This leads to grey areas on how advertisements incorporating lesser celebrities, especially regional influencers, will be treated. SEBI also needs to allow more than one agency to certify past performance data and provide ratings and rankings of market-related products. The requirement that all entities use only one or two approved agencies for validation, can lead to a bottleneck in approvals, apart from over-pricing of such services. Finally, exempting educational or investor awareness material from the Code seems questionable. While a mutual fund industry-level campaign promoting SIPs (systematic investment plans) in general may be just education, when a fund house promotes SIPs in a specific scheme, that should ideally fall within the ambit of the Code.

Published on July 5, 2026