Sebi introduces new ad code permitting celebrity brand endorsements for financial firms

The Securities and Exchange Board of India (Sebi) has introduced a Common Advertisement Code governing how market intermediaries can employ celebrity endorsements. The code applies to entities including stock brokers, depository participants, investment advisers, research analysts, online bond platforms, portfolio managers and mutual funds, allowing them to promote the brand or entity but prohibiting any inducement or claim about a specific financial product.

Any celebrity-featured advertisement must be cleared by the regulator or the entity’s supervisory body and must carry the required risk disclosures, with endorsement expenses barred from being passed to clients or fund schemes. Use of ratings or rankings from a Past Risk and Return Verification Agency is permitted only when fully explained and linked to detailed methodology, and short-format communications such as SMS or push notifications may provide hyperlinks to full disclosures.

Purely educational material without promotional intent is exempt from the code. Additionally, Sebi has relaxed the requirement for research analysts and research entities to maintain call recordings of communications with institutional investors, aiming to reduce compliance burdens.