SEBI Proposes an Advertising Code for Online Bond Platforms

What an online bond platform provider does

An Online Bond Platform Provider offers a digital route for buying and selling listed debt securities. It must register as a stock broker in a recognised exchange’s debt segment. Securities and Exchange Board of India rules introduced a dedicated framework in 2022. The platforms can widen retail access to bonds that were once difficult to discover.

A bond records an issuer’s obligation to pay interest and repay principal. It is not the same as a bank fixed deposit. Repayment depends on the issuer’s financial strength and the security terms. Market prices can change before maturity. Some bonds may also be difficult to sell quickly.

Why advertisements need special care

Digital advertisements compress complex products into short messages. A prominent yield can attract attention while credit risk remains hidden. Countdown clocks and scarcity claims can encourage rushed decisions. Social-media creators may simplify a security beyond recognition. SEBI said complaints and industry representations exposed the need for clearer, standard rules.

The current code already requires advertisements to be accurate, fair and unambiguous. It bans misleading claims, unsupported rankings and celebrity participation. A standard risk warning must accompany every advertisement. The consultation proposes more product-specific information. It also responds to newer forms of online persuasion.

Proposed minimum disclosures

An advertisement for an available security would need the issuer’s name and tenor. It would show the credit rating and its date. Changes in rating or rating agency would also appear through a linked rationale. The advertisement would identify whether the security is secured. It would display clean price, dirty price and yield to maturity.

Clean price excludes interest accrued since the last coupon payment. Dirty price adds that accrued interest. The dirty price is therefore closer to the actual transaction amount. Yield to maturity estimates annualised return when a bond is held until maturity. It assumes scheduled payments and reinvestment conditions. It cannot remove default or liquidity risk.

Warnings and permitted language

SEBI proposes a direct warning that fixed returns are not guaranteed returns. The warning would mention market, credit and default risks. It would ask investors to read all offer documents carefully. Its minimum font size would be ten. Disclaimers must remain reasonably prominent beside the main promotional content.

The phrase “fixed returns” may still appear because bonds belong to fixed-income markets. Any yield range must describe platform inventory on the advertisement date. The higher number cannot receive undue visual prominence. Phrases like “predictable returns” or “passive income” must remain generic and non-promissory. Advertisers must also show calculation methods and suitable disclaimers.

Controls on specific products and behaviour

Principal-protected market-linked debentures require additional care. Their payout depends on an underlying benchmark. Advertisements could not describe returns as fixed, assured or guaranteed. A link to the issuer’s offer document would be required. A prescribed warning would explain the benchmark dependence. This distinction prevents the product name from implying certainty.

Vague claims such as “high yield” or “high rated” would be avoided without a clear basis. Advertisements could not publicise the platform’s own holdings in a bond. Holdings could appear separately on the platform in a prescribed report. These limits reduce pressure created by scarcity or apparent platform endorsement.

Likely impact on investors and platforms

Standard fields can make advertisements easier to compare. They may also slow impulsive purchases. Platforms will need consistent data from issuers, exchanges and rating agencies. Small screens create a design challenge because every disclosure must remain readable. Compliance should not bury risk behind expandable menus or faint text.

Investors still need independent judgement. A high rating is an opinion, not a repayment guarantee. Security over assets may not ensure full recovery after default. Yield can rise because market risk has increased. Buyers should check maturity, cash flows, issuer finances and exit options. Advertising rules improve information but cannot eliminate investment losses.

Conclusion

The proposal recognises that retail bond access must grow with honest communication. Clear prices, ratings and risks can make digital promotion more useful. Rules against urgency and unsupported superlatives also address modern advertising methods. Final drafting should preserve readability on small screens and across languages. Investors will benefit most when platforms present bonds as credit instruments, not guaranteed savings products.