SEBI’s Proposal for a Common Advertisement Code: Financial Advertisements under the Regulatory Lens

Financial advertising regulation in India is fragmented, but the substantive rules are not necessarily very different. Most existing regimes already prohibit assured returns, misleading claims and inappropriate presentation of performance. What varies considerably is whether an advertisement requires prior approval, where it must be filed and how it is monitored.

SEBI’s proposed Common Advertisement Code in its [1]Consultation Paper dated 23 June 2026 seeks to address this procedural fragmentation. For stock brokers, investment advisers, research analysts and online bond platform providers, it would generally replace prior approval with a post-issuance reporting requirement. Advertisements would have to be reported promptly and, in any event, within 24 hours of publication. Prior approval would continue for celebrity endorsements. 

The proposal therefore changes the central compliance question. Instead of asking only whether permission has been obtained before publication, regulated entities will need to demonstrate that every advertisement was correctly classified, compliant when issued, reported within the prescribed period and capable of being supported if subsequently examined.

Needless to say, the proposals remain subject to SEBI’s consideration of stakeholder feedback and the issuance of final amendments and operational circulars.

Present Position under the Law Regarding Advertisements by SEBI-Regulated Entities

At present, advertisements issued by SEBI-regulated entities such as mutual funds, stock brokers, investment advisers, research analysts, portfolio managers, alternative investment funds, online bond platform providers and other intermediaries are required to comply with advertisement norms prescribed under their respective regulatory frameworks.

Although these frameworks broadly seek to ensure that advertisements are fair, accurate and not misleading, the requirements relating to disclosures, disclaimers, performance representation, approval mechanisms and promotional practices differ across various categories of regulated entities. Consequently, entities undertaking multiple regulated activities often face overlapping compliance obligations and varying regulatory expectations.

Present Constraints under the Existing Advertisement Framework

The absence of a consistent advertisement code has resulted in several practical challenges for regulated entities.

• Firstly, different regulatory frameworks prescribe different disclosure requirements and advertisement standards, leading to inconsistency in investor communications.
• Secondly, entities engaged in multiple regulated businesses are required to comply with multiple advertisement frameworks simultaneously, thereby increasing compliance costs and operational complexity.
• Further, varying standards relating to the presentation of performance, risk disclosures, testimonials, rankings and promotional claims may result in inconsistent investor messaging, potentially affecting investor understanding and confidence.

Given the increasing reliance on digital advertisements and social media campaigns, SEBI has observed the need for a uniform regulatory framework that promotes responsible advertising while ensuring adequate investor protection.

Suggestions made by SEBI in the Consultation Paper

To address these concerns, SEBI has proposed introduction of a Common Advertisement Code applicable across specified SEBI-regulated entities. While the proposal largely retains the existing substantive standards for financial advertising, it materially changes the manner in which compliance would be supervised.

The key suggestions include:

• prescribing common principles applicable to advertisements issued by all specified SEBI-regulated entities.
• standardising risk disclosures and mandatory disclaimers across different intermediaries;
• prohibiting misleading advertisements, exaggerated claims and advertisements promising assured returns.
• prescribing uniform standards for the use of performance data, rankings and testimonials.
• placing greater responsibility on regulated entities to ensure that advertisements are accurate, balanced and capable of being substantiated.

Key Proposals under the Common Advertisement Code

The consultation paper introduces several important measures aimed at improving the quality and consistency of financial advertisements.

Uniform Advertisement Principles

SEBI proposes that all advertisements issued by specified regulated entities should adhere to certain common principles. Advertisements should be fair, honest, accurate and capable of substantiation. They should not omit material information or create unrealistic expectations regarding investment performance. Further, advertisements should present information in a balanced manner and should not selectively highlight favourable aspects while suppressing associated risks.

Standardised Risk Disclosures

One of the significant proposals is the introduction of standardised risk disclosures across regulated entities. Accordingly, the advertisements should prominently disclose the risks associated with investments.All advertisements would be required to carry prescribed basic details and disclaimers. For SMS messages, pop-ups, push notifications and similar short-form communications, the regulated entity may provide a hyperlink to the complete disclosures where the limitations of the medium prevent their inclusion.

Restrictions on Misleading Claims

The consultation paper reiterates that advertisements should not:

• guarantee or assure investment returns.
• portray investments as risk-free.
• make exaggerated or unverifiable claims.
• selectively present performance data without appropriate context.
• use misleading rankings, awards or testimonials that may influence investor decision-making.

The objective is to ensure that advertisements remain informative rather than promotional in nature.

Responsible Presentation of Performance Information

SEBI has also proposed uniform principles governing the disclosure of historical performance. Where past performance is presented, advertisements should ensure that such information is accurate, verifiable and accompanied by appropriate disclosures clarifying that past performance does not guarantee future returns. Performance information should be presented in a manner that does not create unrealistic expectations among investors.

Enhanced Accountability of Regulated Entities

The consultation paper places the primary responsibility for advertisement compliance upon the regulated entity itself.

Although the proposed code does not prescribe regulatory pre-clearance for most advertisements, regulated entities may need to strengthen their internal review, classification and documentation processes to manage the risks created by post-issuance scrutiny.

Conclusion

SEBI’s proposal to introduce a Common Advertisement Code represents an important step towards harmonising advertisement standards across India’s securities market. While the existing regulatory framework already contains advertisement requirements for different categories of intermediaries, the proposed code seeks to eliminate inconsistencies by prescribing a common set of principles applicable across regulated entities.

The proposal is particularly relevant in today’s digital environment, where investors increasingly rely on online advertisements, social media campaigns and digital marketing for investment decisions. Uniform standards relating to disclosures, risk warnings and promotional claims are likely to enhance investor confidence and improve the quality of financial communications.

From a compliance perspective, the proposed framework is expected to simplify regulatory obligations for entities carrying on multiple regulated activities by replacing fragmented advertisement standards with a harmonised code. At the same time, the retention of sector-specific requirements ensures that the unique characteristics of different regulated entities continue to be adequately addressed.

Overall, SEBI’s proposed Common Advertisement Code reflects a balanced regulatory approach that seeks to promote responsible advertising while reducing regulatory fragmentation. If implemented, the proposals are expected to strengthen investor protection, improve transparency and create a more consistent and predictable advertisement regime across India’s securities market.

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Author: Akashdeep Sengupta

Co-authored by: Amiya Mukherjee

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[1] https://www.sebi.gov.in/reports-and-statistics/reports/jun-2026/consultation-paper-on-common-advertisement-code-for-specified-sebi-regulated-entities_102304.html