SEBI Proposes Common Advertising Code for Financial Market Intermediaries

The Securities and Exchange Board of India (SEBI) has proposed a Common Advertisement Code (CAC) to create a uniform framework for financial market intermediaries communicating with retail investors on traditional and digital media platforms.

The consultation paper, published as a proposal, aims to replace a variety of sector-specific advertising rules with a single set of rules for the entire securities market ecosystem. The draft framework includes stockbrokers, mutual funds, asset management companies, investment advisers, research analysts, portfolio managers, depository participants and online bond platforms.

The SEBI has called for public comments on the proposal till July 14, 2026, and is looking to give a six-month transition period for implementation after the framework is finalised.

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Advertising Reform:

One of the biggest changes suggested is that most ads would not need pre-approval. SEBI has proposed a post-publication monitoring system, recognising the practical difficulties of reviewing huge volumes of digital content, social media posts and video advertisements before publication.

Under the draft rules, regulated entities will have to upload advertisements or direct hyperlinks to a centralised supervisory reporting portal within 24 hours of publication.

The regulator has proposed tougher rules on the content and presentation of advertising, but made compliance processes simpler. The framework is intended to enhance investor protection by providing safeguards against misleading statements and manipulative marketing practices.

Celebrity endorsements would be subject to some special restrictions under the proposed code. They may endorse a bank or a corporate brand, but they will not be allowed to promote particular financial products, schemes or services.

The regulator has also proposed an outright ban on the use of “dark patterns”- digital design techniques that nudge users into making decisions they didn’t want to make. The move is consistent with the broader guidelines for protecting consumers in the securities market.

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Disclosure Standards:

The draft code also provides that rankings, ratings and performance claims may only be used if they are issued by recognised Past Risk and Return Verification Agencies (PaRRVA) and are accompanied by standardised risk disclosures.

In a bid to stay abreast of modern channels of communication SEBI has permitted abbreviated disclosures in the form of SMS messages, push notifications and pop-up advertisements, so long as they contain direct links to full statutory disclosures.

The regulator has also said that educational content, investor awareness campaigns and communications that do not have promotional intent shall not be treated as advertisements. Activities that are proposed to be excluded from the framework include routine client communications, regulatory disclosures, festive greetings and sponsorship of events.

SEBI and the designated supervisory authorities shall monitor compliance through the centralised reporting system. Firms that make misleading claims, exaggerate past performance, unfairly compare competitors or promise guaranteed returns may face enforcement action.