The Securities and Exchange Board of India (SEBI) has issued an advisory regarding unauthorized virtual trading platforms, including apps and web applications that offer virtual trading, paper trading, or fantasy gaming services based on stock price data of listed companies. Such activities violate the Securities Contract (Regulation) Act, 1956, and the SEBI Act, 1992, which are designed to protect investors. SEBI previously warned the public in a 2016 press release about the risks associated with leagues and competitions in the securities markets that may involve prize distributions. The advisory emphasizes that the public should only engage in trading through registered intermediaries and cautions that participation in unregistered schemes is at the investors’ own risk. These unauthorized platforms are not recognized by SEBI, and thus investors will lack access to investor protection mechanisms and grievance redressal provided by SEBI or exchanges. Investors are urged to avoid any involvement with such unregistered intermediaries or platforms.
Securities and Exchange Board of India
PR No.27/2024
Advisory on unauthorized virtual trading / gaming platforms
It has come to the notice of Securities and Exchange Board of India (SEBI) that some apps / web applications / platforms are offering virtual trading services or paper trading or fantasy games to the public based on stock price data of listed companies.
Such activities are in violation of Securities Contract (Regulation) Act, 1956 and SEBI Act, 1992 which are laws designed to protect investors.
SEBI had also issued a Press Release dated August 30, 2016 which cautioned the public against leagues / schemes / competitions related to securities markets, which might involve distribution of prize monies.
It is reiterated that the public can invest and undertake trading activities in the securities markets only through/with registered intermediaries.
Participation in unauthorized schemes, including sharing of confidential and personal trading data, is at the investors’ own risk, cost and consequences, as such schemes / platforms are not registered with SEBI.
SEBI is issuing this caution, advising investors to not engage with or undertake investment or trading activities through un-registered intermediaries / web applications / platforms / apps. The investors may note that for any kind of disputes relating to such activity, none of the following recourses will be available to investors:
- Benefits of investor protection under SEBI / Exchange(s) Jurisdiction including SCORES.
- Investor grievance redressal mechanism administered by Exchange(s) or the online dispute resolution mechanism administered by Exchanges/Depositories (in).
Mumbai
November 04, 2024
