Markets regulator Securities and Exchange Board of  India (Sebi) was slammed on social networking platform called Twitter after it proposed to ban trading tips or stock specific recommendation on social media.

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Last week, Sebi in a Consultation Paper had said: In order to curb such practice of providing trading tips/messages containing buy/sell/hold recommendations on securities, it is proposed that:

a) No person shall be allowed to provide trading tips, stock specific recommendations to the general public through short message services (SMSs), email, telephonic calls, etc. unless such persons obtain registration as an Investment Adviser or are specifically exempted from obtaining registration.

b) No person shall be allowed to provide trading tips, stock specific recommendations to the general public through any other social networking media such as WhatsApp, ChatOn, WeChat, Twitter, Facebook, etc. unless such persons obtain registration as an Investment Adviser or are specifically exempted from obtaining registration.

The announcement came in after Professor Jayanth R Varma, a blogger on Financial Markets and Professor at Indian Institute of Management, Ahmedabad, in his blog mentioned that more than three years ago, as a member of the Financial Sector Legislative Reforms Commission (FSLRC), he had written a note of dissent in the FSLRC Report which argued that an expansive definition of financial services “creates the risk of regulatory overreach” and “creates scope for needless harassment of innocent people without providing any worthwhile benefits”. He wrote that “regulatory self restraint ... is often a scarce commodity”. 

"If everybody needs a license from SEBI to post any stock specific thing on any social media, SEBI would quickly become one of the richest regulators in the world with a market capitalization rivaling that of Facebook," Varma argued.

Following Sebi's announcement, Twitterati outraged by tweeting with #Sebikidadagiri.