SEBI's June 2026 consultation paper proposes a single Common Advertisement Code to replace the fragmented, entity-specific codes that currently govern how brokers, advisers, analysts, portfolio managers and mutual funds describe what they sell. It is a genuine simplification and should be adopted. But harmonisation is the starting point, not the object: universal 24-hour filing and standing prior approval for celebrity endorsements keep it a permission system, only a tidier one. Parker Karia and I in today's Financial Express on what the paper gets right and where it stops short.
Financial regulation usually follows innovation in products. SEBI’s consultation paper of 23 June 2026 addresses innovation in selling. The proposed Common Advertisement Code says nothing about what regulated entities may offer investors. It governs only how they may describe it, across every medium that now reaches investors.
Advertisements today reach investors through social media, podcasts, webinars and trading applications at a speed and scale the first advertisement codes never contemplated. Those codes remain fragmented and entity specific, differing more in procedure than in principle. A stock broker answers to exchange circulars, investment advisers and research analysts to their master circulars, a mutual fund to the Fifth Schedule of its regulations and a portfolio manager to an annexure of another. SEBI now proposes to replace all of them with a single chapter in the SEBI (Intermediaries) Regulations, 2008, covering brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers and mutual funds.
The proposal is both timely and necessary. The market has moved from distinct intermediaries to integrated platforms that offer several regulated products through one interface. Separate codes for each entity produced overlapping obligations, inconsistent interpretation and avoidable cost, although every code pursued the same objective: advertisements that are fair, balanced and not misleading. The Code is also technology neutral, treating print, broadcast and digital communication alike. Investor harm turns on what a communication says, not on the medium that carries it. It borrows, too, the Central Consumer Protection Authority’s 2023 guidelines on dark patterns, so that false urgency and subscription traps are treated as advertising failures in their own right.
The most significant change proposed is the shift from prior approval to post-issuance reporting. Several existing codes require an intermediary to obtain clearance from an exchange or supervisory body before an advertisement is issued, a model built for a time when advertising was infrequent and confined to traditional media. Entities now respond to market developments on the same day, sometimes within the hour. Requiring clearance for each such communication delays legitimate activity without measurably improving investor protection. SEBI’s own explanation is candid: the prior approval model was designed for traditional advertising where volumes were low and lead times were long.
The proposal then stops short. Every advertisement must still be reported to the supervisory body, promptly and no later than 24 hours from issuance. For an entity that issues hundreds of digital communications a month, that does not reduce the compliance burden. It relocates it from before publication to after. The filing is universal, so supervisory attention remains spread evenly across communications that carry no risk at all. A more proportionate design would rely on internal approval by the entity, prescribed governance standards for how that approval is exercised, and periodic or risk-based review by the supervisory body. Where an advertisement is misleading, it should be taken down through a reasoned order that the entity can contest, not forestalled by a filing obligation imposed on everyone in advance.
The paper also recognises that not every communication issued by a regulated entity is an advertisement. Investor education, factual corporate communication and regulatory disclosure serve a purpose different from promotion and should not be treated alike. The carve-out, however, turns on branding that is “minimal and incidental” and content carrying “no promotional intent”. Both are matters of degree, and degree is exactly what a compliance officer cannot certify. A workable test would be structural rather than aesthetic: educational content should fall outside the Code so long as it identifies the entity, makes no performance claim, names no product and contains no call to action. An entity can apply that test without asking anyone’s permission.
The treatment of celebrity endorsement is the clearest instance of the older approach surviving. SEBI would permit celebrities at the entity or brand level rather than for a named product, which is a liberalisation, but it retains prior approval for every such advertisement. The definition of celebrity then extends across eight categories, taking in anyone with more than five lakh followers on a single social media handle, a television anchor who has completed ten episodes, and a virtual character with lifelike human traits. The rule therefore attaches to who is speaking rather than to what is said. A line drawn at five lakh followers also invites the obvious answer, which is to engage four influencers with four lakh followers each. The requirement is then satisfied and the investor is in precisely the same position. If prior approval is retained, it should at least carry a defined timeline, failing which it should be deemed granted.
Two structural gaps remain. Because the Code is anchored in the Intermediaries Regulations, it reaches only registered intermediaries. Mutual fund distributors, who register with the industry association and not with SEBI, fall outside it, although they remain among the primary points of contact between a product and a retail investor. A common code that omits a large category of sellers preserves the fragmentation it was drafted to remove. Second, the paper sensibly permits a hyperlink to full disclosures where an SMS, a pop-up or a push notification cannot carry them. The same constraint applies to short-form video and audio, where a spoken disclaimer is either unreadable or unheard, and the concession should extend there as well.
The Code is a real simplification and should be adopted. But harmonisation is the starting point, not the object. A single rulebook administered through universal filing and standing approvals is still a permission system, merely a tidier one. SEBI has accepted that the medium no longer determines the harm. It should now accept that the messenger does not either.
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