Not Mandatory For Digital Platforms To Be Notified As SDP, SEBI Clarifies
SEBI also clarified that regulated entities are not restricted to associating with third parties only through specified digital platforms.
The Securities and Exchange Board of India on Wednesday clarified that it is not mandatory for digital platforms associated with regulated entities to seek recognition as Specified Digital Platforms or SDPs.
An SDP is defined as a digital platform that implements measures to prevent violations of regulatory norms related to recommendations or performance claims about securities.
The notification of a platform as SDP is optional, and SEBI does not directly regulate these platforms, the market watchdog said.
However, platforms seeking SDP recognition must demonstrate that they have robust mechanisms in place to avoid violations of SEBI regulations.
SEBI also clarified that regulated entities are not restricted to associating with third parties only through SDPs.
They are free to engage with non-SDP platforms as long as they comply with relevant regulations regarding advice, performance claims, and registration, the market watchdog said.
However, regulated entities such as registered stock brokers or mutual funds can opt to associate with SDPs, according to the SEBI.
This association with SDPs will safeguard regulated entities from violations of certain SEBI provisions, such as the prohibition on associating with unregistered advice providers or those making unapproved performance claims.
Earlier, in August, SEBI had put forth that regulated entities and their agents must not have any direct or indirect link with online advisors unless they are registered with SEBI. However, these restrictions are not applicable if regulated entities associate with third parties through the SDP.
