The Securities and Exchange Board of India (SEBI) on Wednesday cautioned investors against trading in unlisted securities through unauthorised electronic platforms and websites, reiterating that such platforms are not recognised or regulated by the market watchdog.
The advisory comes at a time when investor interest in unlisted shares has risen sharply, particularly ahead of the anticipated initial public offering (IPO) of the National Stock Exchange (NSE), one of the most actively traded unlisted stocks in the country.
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In a circular, SEBI said it has come to its notice that certain electronic platforms and websites are facilitating transactions and trading in unlisted securities of public limited companies. The regulator also noted that it had previously issued press releases, warning investors against conducting transactions or sharing sensitive personal information on such platforms.
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SEBI also referred to earlier advisories relating to unauthorised virtual trading platforms offering paper trading, fantasy gaming products and unregistered online platforms dealing in unlisted debt securities.
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"Investors are once again cautioned about the risks in conducting any transactions or trading on such electronic platforms or sharing any sensitive personal details on the same, as these platforms are neither authorised nor recognised by SEBI," the regulator said.
SEBI emphasised that only recognised stock exchanges are authorised to provide a platform for fundraising and trading in securities.
The regulator warned that investors transacting through unauthorised platforms may not have access to the protections available within the regulated securities market ecosystem.
According to SEBI, investors participating on such platforms would not be entitled to benefits available under the jurisdiction of SEBI and recognised stock exchanges.
The market regulator highlighted that investors using such platforms may not be able to access established grievance redressal mechanisms in the event of disputes.
These include investor protection benefits available under SEBI and exchange regulations, as well as investor grievance redressal systems administered by stock exchanges and the online dispute resolution mechanism operated by exchanges and depositories.
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