SEBI puts brakes on finfluencers, bans real-time stock data in education

Financial influencers (finfluencers) have faced a major setback as the Securities and Exchange Board of India (SEBI) has restricted their use of live stock market data in educational content. As per the new rule issued in a circular on Wednesday, stock market educators can now only access stock prices with a three-month delay, effectively blocking them from offering real-time trading tips. 

The prohibited activities are:

- Providing advice or any recommendation, directly or indirectly, in respect of or related to a security or securities, without being registered with or otherwise permitted by the Board to provide such advice or recommendation.

- Making any claim, of returns or performance expressly or impliedly, in respect of or related to a security or securities, without being permitted by the Board to make such a claim.

Investor education is not one of the two prohibited activities under these regulations. It must be ensured by the persons regulated by the board that such person providing education does not engage in any of the above-mentioned two prohibited activities, directly or indirectly, the circular reads.

Difference between education and advice

A person engaged exclusively in educational activities shall mean that such person is not engaged in any of the two prohibited activities. They should refrain from using market price data from the past three months to mention, display, or refer to any security– whether directly or through a code name in their speech, video, ticker, screen share or any other format. Additionally, they must not indicate future price movements, offer advice or make recommendations related to any security or securities.

The circular confirmed that individuals are free to use professional services offered by the board or their agents such as demat or trading accounts, as long as these services are not used, directly or indirectly for the two prohibited activities.

“It is the responsibility of the persons regulated by the Board to ensure that any person associated with them or their agent, directly or indirectly, does not engage in any of the above-mentioned two prohibited activities, directly or indirectly. However, such responsibility shall be with respect and to the extent of their association,” it adds.

Any violation found could lead to serious consequences, including suspension, penalties or cancellation of their SEBI licence.

These regulations have been in effect since August 29, 2024. Through a circular issued on October 22, 2024, the board instructed regulated entities and their agents to terminate any existing contracts with individuals involved, directly or indirectly, in the two prohibited activities within three months from the circular’s issuance.