(The Securities and Exchange Board of India (SEBI) has issued a circular providing details and clarifications on the association of persons regulated by SEBI, market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories, as well as their agents, with persons engaged in prohibited activities.
Pursuant to recent amendments to the SEBI (Intermediaries) Regulations, 2024, Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2024, and SEBI (Depositories and Participants) Regulations, 2024, published in the Official Gazette on August 29, 2024, the following key provisions have been introduced:
Prohibited Associations:
Persons regulated by SEBI, MIIs, and their agents are restricted from associating, directly or indirectly, with any person who:
Provides investment advice or recommendations regarding securities unless registered with or permitted by SEBI.
Makes claims regarding returns or performance of securities unless expressly permitted by SEBI.
Compliance Obligation:
Regulated entities, including stock exchanges, clearing corporations, and depositories, must ensure that their associated persons or agents do not engage in the prohibited activities outlined above.
Exception for Investor Education:
The term “another person” does not include individuals or entities solely engaged in investor education, provided they do not, directly or indirectly, engage in investment advice or performance claims.
Guidance via FAQs:
The circular includes an annexure (Annexure A) with frequently asked questions (FAQs) to facilitate compliance for regulated entities, MIIs, and their agents.
Issued under SEBI’s statutory powers, this circular aims to safeguard investor interests and ensure the integrity and proper regulation of the securities market and attempts to rein in the finfluencers that are not registered with them and thus unregulated.
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