SEBI’s New Ad Code for Online Bonds: Boosting Investor Trust

The Securities and Exchange Board of India (SEBI) has released a consultation paper to introduce a new advertisement code specifically for online bond provider platforms (OBPPs).

This move aims to foster greater investor awareness and ensure that all advertising communications are fair, balanced, and facilitate informed investment decisions.

Addressing Investor Concerns

SEBI noted that the increasing reach of OBPP advertisements sometimes incorporates behavioral prompts and urgency-based messaging.

Such promotional techniques could potentially lead investors to make rapid decisions without conducting proper due diligence.

Key Guidelines of the Proposed Code

The proposed advertisement code outlines 12 specific guidelines to regulate OBPP communications. These measures are designed to enhance transparency and protect retail investors.

• Fair and transparent advertising is a core requirement.
• Prohibitions are in place against misrepresentations and exaggerated claims.
• A ban on celebrity endorsements for bond platforms is mandated.
• Inclusion of clear disclaimers, similar to those for mutual funds and stock market investments, is compulsory in all advertisements.

Expanding India’s Bond Market

This regulatory initiative aligns with SEBI’s broader objective to deepen India’s bond markets.

A robust bond market provides companies with alternative avenues for capital raising and offers retail investors more diverse investment opportunities beyond traditional stock markets.

Currently, there are 38 SEBI-registered OBPPs operating in India, including prominent brokerage applications such as Groww and AngelOne, alongside specialized bond platforms like GRIP Invest.