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New Delhi: The Securities and Exchange Board of India (SEBI) has approved a set of new guidelines aimed at overseeing unregistered financial influencers, commonly known as “finfluencers,” and revising the delisting process for companies.
These measures come in response to growing concerns about potentially biased or misleading advice from finfluencers and the need to streamline the delisting procedure.
SEBI has introduced rules to regulate finfluencers, who have become increasingly influential in the Indian stock market. Brokers and mutual funds are now prohibited from using unregulated financial influencers for marketing and advertising campaigns. However, those engaged in investor education are exempt from these restrictions.
SEBI Chairperson Madhabi Puri Buch emphasized that these changes aim to address the challenges posed by the rise of finfluencers, particularly in light of India’s low financial literacy rate and the influx of new investors during the COVID-19 pandemic.
The regulator’s actions reflect the growing influence of finfluencers, some of whom reportedly earn between Rs 15 lakh to Rs 30 lakh per month. While recognizing their role in filling an information gap, SEBI’s new rules seek to mitigate risks associated with unregulated financial advice.
A fixed price process also has been approved for delisting frequently traded shares. Companies can now offer shareholders a fixed price for their shares, which must be at least 15% above a floor price determined by SEBI rules. This provides an alternative to the current reverse book-building mechanism.
New criteria have been introduced to determine which stocks can be linked to derivative products, potentially increasing the number of stocks eligible for derivative trading.
These regulatory changes are expected to have a significant impact on the Indian financial markets, aiming to enhance investor protection while streamlining processes for companies and market infrastructure institutions.
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