Introduction
The Securities and Exchange Board of India (SEBI) has ramped up its crackdown on unregistered financial influencers, or “finfluencers,” to curb misleading investment advice. These new regulations, along with high-profile enforcement actions, aim to protect retail investors from potential fraud and market manipulation. This blog explores the latest SEBI guidelines, notable cases, and their impact on the financial ecosystem.
Key SEBI Regulations on Finfluencers
1. Ban on Real-Time Market Data for Education
SEBI has prohibited finfluencers from using live stock prices in educational content. Instead, they are now required to use stock prices with a three-month lag. This measure aims to prevent disguised real-time trading tips under the label of “educational content.”
2. Strict Actions Against Unregistered Investment Advisors
SEBI has intensified action against individuals providing investment recommendations without proper registration. The crackdown includes financial penalties, bans, and disgorgement of illegal profits.
Recent Enforcement Cases:
- Asmita Patel (February 2025) – Fined ₹54 crore and banned from offering investment advice. SEBI found that her training programs indirectly provided unregistered advisory services.
- “Baap of Chart” (December 2024) – Fined ₹17.2 crore and barred from offering stock market courses that secretly provided stock recommendations.
3. New Rules for F&O (Futures & Options) Trading
To protect retail investors from excessive speculation, SEBI has introduced stricter measures in the derivatives market:
- Upfront collection of options premium before trade execution.
- Intraday monitoring of position limits to prevent excessive risk-taking.
- Higher margin requirements on expiry days, reducing manipulation risks.
- Reduction of weekly index derivatives to a single benchmark per exchange.
4. Brokerage Impact: Decline in Revenue
With restrictions on options trading, brokerage firms that thrive on high trading volumes, such as Zerodha and Upstox, anticipate a 30%-50% drop in revenue. The new regulations are expected to shift market dynamics towards long-term investing rather than speculative trading.
5. Prohibition on Partnerships with Unregistered Finfluencers
SEBI has banned registered brokers, investment advisors, and financial firms from associating with unregistered finfluencers. This move aims to prevent indirect promotion of investment advice through social media partnerships.
Market and Investor Reactions
- Investor Safety: Many retail investors welcome SEBI’s actions, seeing them as a safeguard against misleading investment schemes.
- Content Creators’ Concerns: Several finfluencers argue that the new rules unfairly restrict their ability to educate audiences.
- Brokerage Adaptation: Many firms are now focusing on long-term investment tools instead of options-heavy trading platforms.
Final Thoughts
SEBI’s latest moves reflect its commitment to investor protection and market transparency. These regulations will likely reduce retail speculation and promote ethical financial education. As the landscape evolves, compliance with SEBI’s guidelines will be crucial for both content creators and brokerage firms.