The Securities and Exchange Board of India (SEBI) is planning to issue guidance for all listed companies, which will essentially pull the plug on social media information sharing. As per reports, it will be now mandatory for all listed companies to announce any market sensitive information to SEBI first, before revealing them on social media platforms such as Twitter or Facebook.
This decision of SEBI to issue information sharing guidelines has been initiated by the increasing use of social media by financial experts and listed companies to share market sensitive information. SEBI is concerned that such high level information sharing (which is often price sensitive as well) among the social media users will provide them with an unfair advantage over those who are not present online. Hence, various shareholders and investors should be given a level-playing field in order to book profits from any such announcements.
“We are going to make it explicit in the regulations that companies have to report all price sensitive information first to stock exchanges… they can’t do the other way round,” said a senior SEBI official.
This announcement will follow the guidelines which Financial Services Authority (FSA) has recently announced in UK regarding information sharing on social media for listed companies.
FSA has clearly stated that all companies listed will first share any market sensitive news to them first, before disclosing them on the social media.
Last April, when NetFlix’s CEO announced on his Facebook page that viewers have seen 4 billion hours of video on their platform in last three month, the prices of his company’s share soared 4.5% within few hours as buyers took this as a positive news and bought more shares of Netflix.
After this development, US Securities governing body: Securities and Exchange Commission had to intervene and announce that it’s ok to share price sensitive information on social media networks, as long as the investors are aware where to look for information.
Last year, when Billionaire investor Carl Icahn announced on Twitter that his company is betting big on Apple, the share prices of Apple zoomed from $475.76 to a high of $494.66 within 60 minutes, thereby increasing it’s market capital by $17 billion.
US is most probably ok with social media information sharing as more than 80% of US citizens are already online, which is not the case with India where only 14% of the population is on the Internet and among them only half of them are on social media.
Being an investor, do you believe that SEBI is right in making it mandatory to keep them in loop regarding any information sharing or you think that this decision will make India lag behind other countries where information is being shared live and fast on Social Media sites?
Do share your views by commenting right here!
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