The Securities and Exchange Board of India (SEBI) on Tuesday cautioned investors against dealing with platforms known as ‘opinion trading platforms’, which do not come under its regulatory purview.
The regulator said ‘opinion trading platforms’ provide their users or participants a platform to trade or 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.
In some cases, opinion trading platforms are designed in a manner so as to resemble an investment platform as they use terminologies such as profits, stop loss, trading etc., terms closely associated with trades in securities.
“Investors are advised to note that in general, opinion trading does not fall within regulatory purview of Sebi, as what is traded is not security,” the regulator said in a release.
Sebi warned investors or participants that no investor protection mechanism under securities market purview will be available for such investment/participation.
“Since none of the platforms providing opinion trading can qualify to be recognized stock exchange, and are neither registered nor regulated by Sebi, any trading of securities on them is illegal,” Sebi said.
The regulator asked recognised stock exchanges to initiate appropriate action for such violations.
