SEBI warns against unauthorized virtual trading platforms

The Securities and Exchange Board of India (SEBI) has issued a warning against unauthorized virtual trading platforms, including apps and web applications that offer virtual trading services, paper trading or fantasy games based on share price data of listed companies. Such activities violate the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992, which are designed to protect investors. SEBI had previously warned the public in a press release in 2016 about the risks associated with leagues and competitions in the securities markets that may involve distribution of prizes. The consultation emphasizes that the public should only trade through registered intermediaries and cautions that participation in unregistered schemes is at the investors’ own risk. SEBI does not recognize these unauthorized platforms and therefore investors will not have access to investor protection and grievance redressal mechanisms provided by SEBI or exchanges. Investors are urged to avoid any interaction with such unregistered intermediaries or platforms.

Securities and Exchange Board of India

PR No. 27/2024

Advice on unauthorized virtual trading/gaming platforms

The Securities and Exchange Board of India (SEBI) has observed that some apps/web applications/platforms are offering virtual trading or paper trading services or fantasy games to the public based on share price data of listed companies.

Such activities are in violation of the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992, which are laws designed to protect investors.

SEBI also issued a press release dated August 30, 2016 cautioning the public against leagues / schemes / competitions related to securities markets that may involve the distribution of cash prizes.

It is reiterated that the public may invest and trade in securities markets only through registered intermediaries.

Participation in unauthorized schemes including sharing of confidential and personal trading data is at the investors’ own risk, expense and consequences as such schemes/platforms are not registered with SEBI.

SEBI issues this advisory advising investors not to engage in investment or trading activities through unregistered intermediaries/web applications/platforms/programs. Investors may note that none of the following remedies will be available to investors for any disputes related to such activities:

Benefits of investor protection under the jurisdiction of SEBI / Stock Exchange including SCORES.

Investor Grievance Mechanism Administered by Exchanges or Online Dispute Resolution Mechanism Administered by Exchanges/Depositories (c).

Mumbai
November 4, 2024