At a time when financial influencers тАУ popularly known as finfluencers тАУ have gained a wide following with some commanding a follower count in millions on social media, the capital markets regulator Securities and Exchange Board of India (Sebi) said that regulators across the globe are mulling on ways to create a regulatory framework for such entities.┬а
тАЬThis is a problem that every regulator across the globe is facing. When we met at IOSCO, it was a very hot subject. I think we are all trying to find the right approach,тАЭ said Sebi chairperson Madhabi Puri Buch, while addressing the media after a board meeting of the regulatory watchdog.┬а
тАЬI think at this stage the only thing that I can say is that SebiтАЩs approach is to untangle a complex issue because if it is complex, you canтАЩt put your arms around it. Our objective will be to untangle it and see what exactly are the risks that we are worried about,тАЭ she added.┬а
She further added that Sebi has тАЬnot yet reached a conclusionтАЭ on the manner in which a regulatory framework can be created for financial influencers.┬а
тАЬThe jury is still out on whether we need one umbrella under which everything is handled or whether we need to unbundle the risks and deal with them separately. It is a complex issue and we are still deliberating,тАЭ she said.┬а
This assumes significance as the recent past has seen the regulator issue show cause notice to individuals who were found giving investment advice without registering with the regulator as Registered Investment Advisors or RIAs.┬а
тАЬThis has been on the anvil for a while now and we should expect Sebi to come out with some detailed guidelines on the so-called тАШfinfluencersтАЩ with a proper definition soon,тАЭ said Gaurav Rastogi, Founder, Kuvera, an online investment and wealth management platform. ┬а
тАЬGlobally, several countries including Australia and Germany already have stringent guidelines wherein any social media influencer without a prior or proper license can face stringent action. This is crucial since social media trends have a huge impact on investor behaviour, and lack of proper knowledge of financial products could hurt their financial interests. Regulators globally also need to develop a tech-led approach to be able to take immediate action wherever needed. We believe this is the need of the hour, and in investors’ best interest,тАЭ he added.┬а
The last couple of years have seen the emergence of the so-called finfluencer community as a record number of first-time investors entered the markets and searched for investment related videos or modules.┬а
Incidentally, the number of followers of some of the well-known financial influencers even dwarfs the number of followers that some of the biggest brokerages have on social media platforms like YouTube and Instagram.
