Sebi proposes allowing celebrity brand endorsements for brokers, MFs, PMS under new Common Advertisement Code

The Securities and Exchange Board of India (Sebi) on Tuesday proposed allowing market intermediaries, including stock brokers, mutual fund houses, investment advisers and portfolio managers, to engage celebrities for promoting their brands or entity name, while prohibiting endorsements of specific products or services.

The proposal is part of a consultation paper on a Common Advertisement Code (CAC) for specified Sebi-regulated entities, aimed at harmonising advertising norms, reducing compliance burdens and strengthening investor protection.

Celebrity endorsements allowed only at brand level, not products

Under the proposed framework, celebrity endorsements would be permitted only at the regulated entity's brand or corporate level, subject to prescribed conditions and appropriate disclaimers. Celebrities would not be allowed to endorse specific investment products or services offered by such entities.

At present, celebrity endorsement is permitted at the industry level in AMCs with prior approval from Sebi.

Sebi replaces prior ad approvals with 24-hour post reporting system

The capital market watchdog has also proposed replacing the existing requirement of prior approval for advertisements by stock brokers, Online Bond Platform Providers (OBPPs), investment advisers (IAs) and research analysts (RAs) with a post-issuance reporting mechanism.

Advertisements would need to be reported to the relevant stock exchange or Sebi-recognised supervisory body within 24 hours of their issuance, after which they would be subject to monitoring.

"Instead of prior approval, the Board or Sebi-recognised supervisory bodies shall conduct post-issuance monitoring of advertisements reported by the specified regulated entities," the regulator said in its consultation paper.

The regulator noted that entities registered in multiple capacities often face overlapping compliance requirements across exchanges and Sebi regulations, leading to duplication of approvals and operational inefficiencies. It added that in today’s digital environment, frequent social media posts and promotional content make prior approvals impractical and time-sensitive.

Common Advertisement Code to unify rules across market intermediaries

The watchdog has further proposed permitting specified regulated entities to use ratings or rankings in advertisements, provided such ratings are assigned by a Past Risk and Return Verification Agency (PaRRVA).

Under the proposal, any recognised PaRRVA would define methodology standards in consultation with industry bodies, ensuring comparability and objectivity across market participants. Advertisements using such ratings would also need to disclose methodology details or provide links to the PaRRVA portal or entity website.

To address digital formats, Sebi has proposed allowing abbreviated disclosures in SMSes, push notifications and pop-ups, provided they include hyperlinks to full risk disclosures. The regulator has also clarified that purely educational content without promotional intent will be excluded from the advertisement code.

Sebi said the proposed Common Advertisement Code seeks to replace multiple existing entity-specific and exchange-specific rules with a single unified framework covering brokers, depository participants, investment advisers, research analysts, OBPPs, portfolio managers, mutual funds and asset management companies.

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. Sebi has sought public comments on the proposal till July 14.