It is not mandatory for platforms to be registered with SEBI; the board specifies in specified social networks

Market regulator Securities and Exchange Board of India (SEBI) has clarified that digital platforms used by regulated entities to interact with third parties are not required to be registered with SEBI. SEBI clarified, “It is not mandatory for any digital platform to be registered as Specified Digital Platform (SDP) and there is no regulation of these digital platforms by SEBI”. Digital platforms include Meta, Google, and others.

The SEBI clarification also added that the curative actions currently being taken by some digital platforms are in line with the law. Preventive measures are considered for any digital platform to be notified as SDP is not mandatory and it is up to the platform to choose or not to be notified as SDP.

Seeing a huge increase in complaints about unauthorized entities, SEBI amended the regulation in August this year, which mandated SEBI registered entities not to engage directly or indirectly with unregistered entities, providing any advice or recommendations regarding securities, unless the person is registered with SEBI. . Businesses regulated in the same way are not allowed to associate with any person making any claim, for compensation or performance expressly or by implication, in relation to or relating to a security or securities, unless the person is authorized by the Board to make such a claim.

SEBI said that the purpose of this provision in the above mentioned rules is to give confidence to the regulated entities that if the regulated entity is associated with an SDP, it is automatically assured that it is not caught as violating the provisions of the regulations. Therefore, in the event of any violation of Regulation 16A of the Arbitration Rules, Rule 44B of the SECC Regulations, and Regulation 82B of the DP Regulations, it will be a valid defense for the regulated entity associated with the digital platform that is SDP.

Clarification noted that it is not expected that the regulated entity will cover itself only/through SDP. It can also be associated with/through a non-SDP digital platform. However, in that case, you are responsible for ensuring that the provisions of Regulation 16A of the Intermediaries Rules, Regulation 44B of the SECC Regulations, and Regulation 82B of the DP Regulations.

SEBI issued the clarification in the wake of various queries from the media and concerns raised by major digital media companies and industry associations.