SEBI proposes advertisement code for online bond platforms

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The Securities and Exchange Board of India (SEBI) has proposed an advertisement code for online bond providers platform (OBPP) to boost reach and on account of need for investor awareness about this asset class, according to a consultation paper released August 21.

“The increasing reach and impact of such advertisements necessitate a review of the extant Advertisement Code to ensure that communications remain fair, balanced and conducive to informed investment decisions,” the regulator said in the paper.

There are about 38 SEBI registered OBPPs with National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) each, which include popular brokerage applications such as Groww, AngelOne and bond only platforms like GRIP Invest.

SEBI proposed 12 codes which include fair and clean advertising, avoiding misrepresentations, exaggerated claims that are unrelated to the nature of the product, among others. The markets watchdog also proposes the insertion of a disclaimer in all advertisements akin to mutual funds and stock market investments. Further, the proposed code also bans celebrity endorsement.

“Advertisements increasingly utilise behavioural prompts, urgency-based messaging and promotional techniques that may encourage investors to take investment decisions without adequate due diligence. Accordingly, it is considered necessary to address advertisements that create artificial scarcity, fear of missing out (FOMO) or otherwise induce investors to make hurried investment decisions,” SEBI said.

The draft code, released by the Department of Debt and Hybrid Securities (DDHS), comes months after a similar framework was proposed for market intermediaries including Association of Mutual Funds of India (AMFI).

SEBI has taken up deepening bond markets as an important task to enable sources other than just the stock markets for companies to raise capital and retail participants to invest.

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