Synopsis

Sebi is tightening the reins on advertising practices for online bond platforms, aiming to protect investors from hasty decisions. New rules mandate that promotional content provides standardized information about specific securities. Terms such as 'fixed returns' must be accompanied by explicit risk disclaimers, while ambiguous claims like 'high yield' will also be subject to regulatory restrictions.

New Delhi, Sebi has proposed tighter advertising norms for online bond platform providers, including restrictions on promotional claims that could encourage investors to make decisions without adequate due diligence.

The proposed revised advertisement code seeks to address the growing use of digital advertising, social media and influencer-led promotions by online bond platforms, according to a consultation paper issued by the regulator on Friday.

The regulator has proposed restrictions on advertisements that use urgency, behavioural prompts, and fear-of-missing-out messaging, which may encourage investors to act without adequate due diligence.

For advertisements featuring specific securities, OBPPs would be required to provide standardised information, including the issuer, tenor, credit rating, nature of the security, clean and dirty prices, yield to maturity and the Credit Risk-o-meter.

The regulator has also proposed guidelines governing the use of terms such as "fixed returns", "predictable returns" and "passive income" to ensure such descriptions do not create an impression of assured returns.

Advertisements using the term "fixed returns" would have to carry a prominent disclaimer stating that fixed returns are not guaranteed and that debt securities are subject to market, credit and default risks.

The market watchdog has also proposed restrictions on vague promotional claims such as "high yield", "high rated" and "high returns" that are not adequately substantiated.

The proposed code would operate alongside a common advertisement code applicable to specified SEBI-regulated entities.

The Securities and Exchange Board of India (Sebi) has invited comments from stakeholders on the consultation paper by September 11.

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