The move targets online brokerages and investment platforms that use sign-up bonuses, referral rewards and trading incentives to attract customers.
Investment platforms and stockbroking apps may have to rethink their customer acquisition strategies after the Securities and Exchange Board of India (SEBI) proposed banning incentives linked to account opening, reactivating dormant accounts and increasing trading activity.
The proposal is part of SEBI's draft Common Advertisement Code (CAC), released for public consultation on June 23, which seeks to establish a uniform advertising framework for stock brokers, mutual funds, investment advisers, portfolio managers, research analysts and other regulated entities.
No rewards for signing up or trading
Under the proposed rules, regulated entities would not be allowed to offer vouchers, coupons, gift cards, cashback or similar incentives that encourage investors to open trading or demat accounts, reactivate inactive accounts or execute more trades.
The move targets a customer acquisition model widely used by online brokerages and investment platforms, many of which have relied on sign-up bonuses, referral rewards and trading-linked incentives to attract new users and boost engagement.
If implemented, the restrictions could force firms to shift their focus from promotional offers to product quality, pricing and investor education.
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Broader investor protection push
SEBI's proposal goes beyond banning rewards. The draft code seeks to curb advertising practices that could influence investment decisions through misleading or manipulative techniques.
The regulator has proposed prohibiting advertisements that promise guaranteed returns, make exaggerated claims, feature testimonials, or present unfair comparisons with competing products or services.
The draft also bars advertisements that encourage excessive trading or create unrealistic expectations about investment outcomes.
The proposals reflect SEBI's broader efforts to strengthen investor protection amid the rapid growth of digital investing platforms and retail participation in capital markets.
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Dark patterns under scrutiny
Another significant feature of the consultation paper is the proposed prohibition on "dark patterns" in digital marketing.
SEBI has proposed banning practices such as false urgency, forced actions, subscription traps and interface designs that manipulate users into taking decisions they might not otherwise make.
The proposal aligns securities market advertising with the Central Consumer Protection Authority's guidelines on dark patterns and signals that regulatory scrutiny is expanding beyond advertising claims to include the design of digital user experiences.
For investment apps, this could mean reviewing onboarding journeys, promotional notifications and user interface elements that encourage frequent trading or create pressure to act immediately.
New marketing strategy
The proposed restrictions could have wide-ranging implications for fintech platforms, discount brokers and wealth management apps that have increasingly adopted digital-first marketing strategies.
Over the past few years, competition in the online investing space has intensified, prompting many firms to use referral programmes, limited-time offers and engagement-based rewards to acquire customers at scale.
If SEBI finalises the proposal in its current form, firms may need to rely more heavily on transparent communication, educational content and long-term customer engagement rather than promotional incentives.
The regulator has invited public comments on the consultation paper until July 14. Once implemented, the Common Advertisement Code could mark a significant shift in how financial products and services are marketed in India, placing greater emphasis on responsible advertising and investor protection while discouraging sales practices that encourage unnecessary trading or account openings.
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Published on: Jun 26, 2026 7:35 AM IST
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