Sebi Warns Against Virtual Trading Platforms

The Securities and Exchange Board of India (Sebi) has advised investors against using virtual trading or gaming platforms for trading activities. Sebi's statement highlights that these platforms often violate securities laws and that trading should be conducted only through registered intermediaries to ensure investor protection.

The Securities and Exchange Board of India (Sebi) issued a strong warning to investors on Monday, urging them to avoid engaging in trading through virtual trading or gaming platforms. Sebi emphasized the importance of using only registered intermediaries to undertake trading activities.

According to Sebi, recent observations have shown that some platforms are offering virtual trading services, paper trading, or fantasy games utilizing stock price data from listed companies. Such practices are a breach of the Securities Contract (Regulation) Act, 1956 and the Sebi Act, 1992, which are established to safeguard investors.

In its advisory, Sebi highlighted the risks involved in participating in unauthorized schemes, particularly concerning the sharing of confidential and personal trading data. It stressed that investors participating in these activities do so at their own risk, as these platforms lack Sebi registration.

Sebi also reminded investors that any disputes arising from engaging with unregistered intermediaries will not be covered by the investor protection mechanisms under Sebi or exchanges jurisdiction, such as SCORES and the investor grievance redressal mechanism. This advisory follows a similar warning issued in August 2016 regarding leagues or schemes related to the securities markets.

(With inputs from agencies.)