Guwahati: The market regulator SEBI (Stock Exchange Board of India) is developing regulations to govern the growing base of financial influencers and advisors that provide advice on social media.
“We are working on the guidelines, “SK Mohanty, a member of the Securities and Exchange Board of India, said on the side-lines of an event on corporate governance in Mumbai.
Recently there has been an increase of online influencers in India who are giving financial and investment advice even though they may not be qualified to do so. The impact of such influencers has been detrimental at times, especially in the case of recent startup listings.
Additionally, there have been instances of influencers compensated by companies to increase their stock prices through advice. The appeal of such financial influencers is mainly through their ability to break down complex financial jargon into simple terms.
The watchdog has also warned investors to not rely on stock tips and recommendations from financial influencers which they receive from social media.
Due to lack of regulations fininfluencers (financial influencers) continue to give advice claiming it to be under the sphere of financial literacy. However, on the other hand the financial influencers do not charge any fee from people on social media and nor they enter any contract for investment advice.