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The Securities and Exchange Board of India (Sebi) has proposed stricter advertising requirements for online bond platform providers (OBPPs), seeking to make digital promotions more transparent and reduce messaging that could influence investors to act without sufficient due diligence. The proposed framework addresses advertising through social media and influencer-led campaigns, while introducing standardised disclosures for advertisements featuring specific securities. It also sets conditions for terms such as “fixed returns” and “high returns”, requiring appropriate risk disclosures and restricting unsupported claims. Stakeholders can submit comments on the consultation paper until September 11.
The Securities and Exchange Board of India (Sebi) has proposed tighter advertising standards for online bond platform providers (OBPPs), with the regulator seeking to strengthen investor disclosures as digital promotion of debt securities becomes more widespread.
The proposed changes are contained in a consultation paper issued by Sebi and are aimed at advertisements appearing across digital platforms, including social media and campaigns involving influencers. The regulator is particularly concerned about promotional approaches that could prompt investors to make investment decisions without adequately assessing the risks associated with debt securities.
Under the proposed revised advertisement code, online bond platforms would face restrictions on messaging that creates a sense of urgency or uses behavioural prompts to encourage immediate action. Advertising that relies on fear of missing out, for instance, would also face restrictions where such communication could encourage investors to bypass proper due diligence.
The regulator has proposed a standardised disclosure framework for advertisements that promote specific securities. Such advertisements would need to provide key information about the investment, including the issuer, tenor, credit rating and nature of the security.
The disclosures would also have to include the clean and dirty prices of the security, yield to maturity and the Credit Risk-o-meter. The objective is to give potential investors important information in a consistent format before they consider investing through an online bond platform.
Sebi has also proposed rules governing the language used to describe potential investment outcomes. Terms including “fixed returns”, “predictable returns” and “passive income” would need to be presented carefully so that advertisements do not create an impression that returns are assured.
Where an advertisement uses the expression “fixed returns”, the proposed framework would require a prominent disclaimer clarifying that such returns are not guaranteed. The disclaimer would also have to highlight the market, credit and default risks associated with debt securities.
The consultation paper proposes similar scrutiny of broad promotional descriptions such as “high yield”, “high rated” and “high returns”. Such claims would need adequate substantiation, limiting the use of attractive but potentially ambiguous descriptions in investment advertising.
The proposed rules come as online bond platforms increasingly use digital channels to reach retail investors. Unlike traditional investment communication, online advertising can combine short-form promotional messages with targeted campaigns, making the quality and completeness of disclosures particularly important.
The revised code is proposed to function alongside the common advertisement code already applicable to specified entities regulated by Sebi. This would create an additional layer of requirements specifically addressing the way online bond platforms market investment opportunities.
The regulator has invited comments from stakeholders on the consultation paper. Market participants and other interested parties have until September 11 to submit their feedback.
The proposed framework, if implemented, would place greater responsibility on online bond platforms to ensure that promotional material remains factual, balanced and adequately informative. It also reflects Sebi's broader focus on protecting investors as financial products increasingly reach consumers through digital advertising and social media channels.
Source- PTI
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