SEBI Restricts Live Market Data for Investor Education to Combat Mis-Selling

The Securities and Exchange Board of India (SEBI) announced a significant shift in its regulations concerning investor education, stating that it will ban the use of live market data. This decision aims to address ongoing issues related to mis-selling practices in the financial education sector. The new rule comes shortly after SEBI imposed one of its largest penalties on a financial influencer, highlighting the urgency of tightening oversight in this area.

At a press conference held at the National Stock Exchange in Mumbai, SEBI Chairman Tuhin Kanta Pandey emphasized the need for regulatory consistency. He stated, “Only past market data will be used for educational purposes; current data should not be used.” This announcement marked the launch of the Past Risk and Return Verification Agency (PaRRVA), a new framework developed in collaboration with the NSE and CARE Ratings to independently verify the performance claims made by registered market intermediaries.

Addressing Regulatory Confusion

Pandey acknowledged existing inconsistencies in SEBI’s guidance that have created confusion among market educators. One circular issued in January 2025 restricts educators from using market data from the previous three months, requiring a minimum lag to prevent concealed stock-tipping. In contrast, the 2023 Investment Adviser Master Circular permits the use of live market feeds, provided educational entities do not offer actionable advice.

This inconsistency has left educators, including algorithm trainers and technical analysts, uncertain about compliance when utilizing real-time data in their teaching. Despite recognizing the regulatory gap, Pandey dismissed claims of a “regulatory vacuum,” asserting instead that there is merely a “lack of understanding.” He reiterated SEBI’s commitment to preventing mis-selling disguised as educational activities, stating, “Live data should be for education only, not for current market action.”

Enforcement Following Significant Penalty

This clarification comes in the wake of SEBI’s December 4 order against Avdhoot Sathe, a financial influencer whose academy faced severe penalties. SEBI directed Sathe to disgorge Rs 546 crore and prohibited him and his trading academy from participating in securities markets. The regulator found that the academy had provided specific buy and sell recommendations, stop-loss levels, and live trading calls without the necessary registration as investment advisers.

Referencing a recent survey, Pandey pointed out that 62 percent of respondents make investment decisions based on recommendations from financial influencers, yet only about one-third reported having adequate knowledge of the securities market. He stressed the necessity for credible performance data to manage investor expectations and encourage responsible investing practices.

With these new regulations, SEBI aims to enhance the integrity of financial education in India and protect investors from misleading practices while fostering a more informed investment community.