The Securities and Exchange Board of India on Tuesday issued a public warning against "opinion trading platforms," cautioning that these platforms operate outside of its regulatory oversight and offer no investor protection under securities law.
Such platforms allow users to engage in transactions based on the outcome of specific events, often using terminology similar to traditional trading platforms.
SEBI advised investors to be aware that opinion trading generally falls outside of its regulatory purview since the transactions do not involve securities.
"Some platforms known as 'Opinion Trading platforms' provide their users/participants a platform to trade/enter into arrangements wherein the payout is dependent on the outcome of a yes/no proposition of happening or not happening of the underlying event.. Investors/participants should be aware that no investor protection mechanism under securities market purview shall be available for such investment/participation," as per the release.
The regulator further warned that none of these platforms providing opinion trading can qualify to be recognised stock exchange, and are neither registered or regulated, and any trading of securities on them is illegal (in case some of the opinions traded qualify as security).
SEBI said that such platforms are liable to face action for violation in that case. Recognised stock exchanges are advised to initiate appropriate action for such violations.
Even in this case investor/participants are made aware that none of the investor protection mechanisms will be available as their trades will not be on a recognised stock exchange, it added.
The purpose of the warning is to create awareness about the role of SEBI with respect to opinion trading platforms, the regulator said.
(With PTI inputs)
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