The Securities and Exchange Board of India (SEBI) has introduced a new rule to crack down on “finfluencers” (financial influencers) who provide stock market advice. The new regulation, issued on January 29, 2025, states that no one can use live stock market data for educational purposes. Instead, only three-month-old stock price data can be used. This rule aims to stop people from giving investment advice under the guise of education, which could mislead investors.

What are SEBI’s New Rules?

SEBI has made it clear that anyone offering stock market education cannot show or discuss stock prices that are less than three months old. This includes live price data, stock names, and any content that suggests investment advice.

In its circular, SEBI emphasized that if someone is genuinely involved in education, they should not be involved in any activities that might be seen as giving unauthorized investment advice.

Impact on Finfluencers

This new rule could be a big blow to finfluencers on platforms like YouTube, Instagram, and Telegram who were using live stock updates and tips to attract followers. In October 2024, SEBI had already issued a directive preventing financial institutions from associating with unregistered financial influencers. Now, with this new rule, it’s clear that finfluencers cannot give trading advice, even if they call it “education.”

Key Points of SEBI’s Circular

• No Unauthorized Investment Advice: Only professionals registered with SEBI can offer stock market advice.
• No False Promises: No one can promise guaranteed profits or returns unless SEBI allows it.
• Companies Will Be Held Accountable: Financial institutions working with influencers who make false claims will also be held responsible.
• Education is Allowed, But Not Hidden Advice: Giving stock market education is fine, but giving investment advice or making predictions is strictly prohibited.
• Transparent Advertising: SEBI-registered institutions cannot partner with finfluencers for promotional deals.
• Ban on Secret Deals: Transactions involving money, referrals, or customer data will be banned.
• Strict Penalties for Violations: Violating these rules could lead to fines, suspension, or even cancellation of SEBI registration.
• Rules Are Already in Effect: These rules became effective from August 29, 2024, and companies had to comply by January 2025.

Why Did SEBI Take This Step?

Finfluencers have become very popular on social media platforms like YouTube, Instagram, and Telegram, with many giving stock tips under the guise of education. However, many of these influencers were charging fees for memberships, courses, or private groups where they shared stock tips, often leading small investors to make poor decisions. SEBI’s move aims to stop unregulated financial advisors and maintain transparency in the market.

Impact on the Finfluencer Industry

The new rules will force many finfluencers to rethink their strategies. Without the ability to use live stock data, their content may lose popularity. To comply with SEBI’s guidelines, they will either need to get SEBI registration or completely change the type of content they create. SEBI’s action clarifies the need to keep a clear distinction between stock market education and investment advice. Those who break these rules could face serious consequences from SEBI.