Controlling social media rumours is a challenging job: German regulator

The challenges faced by the German capital market regulator BAFIN are no different from what SEBI faces in India.

Expressing concern over the instant spread of information due to interconnectedness of financial markets, Karl-Burkhard Caspari, Chief Executive Director, Securities Supervision, BAFIN, said: “Decision makers and private investors today are linked, for example, through social media in such a way that factors or rumours of relevance for the capital markets spread like wildfire throughout the world within just moments. Here the onus is especially on financial service providers and issuers to ensure orderly capital market communication over official information distribution channels. The uncontrolled dissemination of information can result in investors being misled and deprive the stock exchanges of the possibility of responding — for example by suspending trading.”

Outlining the importance of financial literacy to distinguish the good from the bad, he said: “Having an adequate understanding of the financial markets and financial products is an essential basic prerequisite for preventing investors from suffering damages that may arise from ill-suited products.” “We most certainly share the experience of transparency being key to a functioning capital market. This principle should also hold true for supervisors,” said Caspari.

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