SEBI Clarifies Stance on Digital Platforms as Specified Digital Platforms

SEBI announced that digital platforms working with regulated entities are not required to become Specified Digital Platforms (SDPs). While no regulatory framework exists for SDPs, becoming one is voluntary. SEBI emphasized that the association with SDPs protects entities from certain regulatory violations.

The Securities and Exchange Board of India (SEBI) has clarified that digital platforms associating with registered entities are not required to gain recognition as Specified Digital Platforms (SDPs). This statement addresses growing concerns and queries highlighted in various news outlets regarding the urgency for digital platforms to seek SDP status.

Currently, there is no regulatory framework mandating SDPs, and SEBI clarified that becoming an SDP is purely optional for digital platforms. By partnering with SDPs, regulated entities are automatically safeguarded against certain compliance violations as per the Intermediaries Regulations, and SECC and Depository Participants Regulations. However, collaboration can also occur without SDP status, wherein the regulated entity must ensure adherence to SEBI regulations.

The statement follows SEBI's regulatory updates in August, which restrict exchanges, clearing corporations, and depositories from associating with unauthorized advisory entities. SEBI emphasized that its guidelines aim to protect regulated entities by clearly defining the roles and responsibilities when engaging with digital platforms, whether or not they are SDPs.

(With inputs from agencies.)