SEBI Revises Guidelines on Mobile and E-mail Alerts for Investors

The Securities and Exchange Board of India (SEBI) is the authority in charge of supervising and regulating the securities and capital markets in India. It was founded in 1988 as a non-statutory organisation and was granted statutory status in 1992 with the enactment of the SEBI Act, 1992.

SEBI Revised Guidelines for Stock Brokers

On December 3, 2024, the capital markets regulator, SEBI, updated its guidelines regarding the use of shared mobile numbers and email addresses by stock brokers for investor alerts, with the intention of improving operational convenience.

The new regulations, which take effect immediately, seek to achieve a balance between ensuring regulatory compliance and providing brokers with operational flexibility. According to the revised framework, SEBI stated that stock brokers are permitted to upload a shared mobile number or email address for several clients, subject to specific conditions.

Notable Exceptions in SEBI’s Guidelines for Users

The exception is applicable to clients who are part of the same family, which includes oneself, one’s spouse, dependent children, and parents. It also encompasses certain non-individual clients like Hindu Undivided Families (HUF), corporations, partnerships, and trusts. 

For non-individual clients, shared contact information may only be submitted if the individual is an authorised representative. This could include a Karta within HUFs, a partner in a partnership firm, a trustee or beneficiary in a trust, or an individual designated by the corporate board as the primary contact, as stated by the regulator.

SEBI’s Recommendations for Essential Revisions to Stock Brokers  

The revised framework revises SEBI’s previous circulars from 2011 and August 2024, responding to enduring issues highlighted by participants, including the Brokers’ Industry Standards Forum (ISF). The most recent circular clarifies that all required written consents and resolutions need to be established to authenticate the shared contact information.

In addition, the regulator has instructed stock exchanges to amend the pertinent bye-laws, rules, and regulations to facilitate the execution of these directives and to inform members of the updates.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.