Solution not as easy: Zerodha's Nithin Kamath on Sebi's new regulations for finfluencers

economictimes.indiatimes.com:

Zerodha founder and chief executive Nithin Kamath said that regulations made for a few people who are misselling, can potentially hurt the livelihood of the entire referral industry.

Kamath, on his community platform TradingQnA, said that Sebi’s consultation paper is in the right direction and will “disallow any registered intermediary with SEBI to associate in any way with anyone who is acting like an advisor or analyst without being registered”. However, he added that “the solution to this isn’t as easy if you think of the overall structure of the capital markets”.

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In a consultation paper on August 25, Sebi introduced a proposal to limit interactions between entities regulated by it and unregistered ‘finfluencers’.

“As I mentioned earlier, the broking industry has tens of thousands of people who rely on introducing customers as sub-brokers, APs (authorised persons), remisier etc., partnered with over 200 retail brokers for a living. Any regulation made for a few people who are misselling, overselling, etc, can hurt the livelihood of this entire industry and sector that depends on revenue from introducing customers to brokers,” said Kamath.

Kamath, who founded one of India’s largest brokerage firms, also added that a majority of referral customers on its platform are “from individual customers and partners who are not the finfluencer types”.

He is also part of the advisory committee at Sebi.

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