SEBI warns public against illegal virtual trading platforms

In its notice, SEBI expressed alarm over the growing threat from online platforms offering fantasy games to the public based on trading data of shares of listed companies.

The regulator also said that users transacting on these illegitimate platforms will do so at their own “risk, cost and consequences.”

In 2016, SEBI issued a circular banning leagues and competitions with cash prizes associated with the securities markets.

Markets regulator Securities and Exchange Board of India (SEBI) on Monday (November 4) warned the public against unauthorized virtual trading and online gaming platforms.

In his recommendation SEBI has raised the alarm regarding the growing threat from online platforms offering fantasy games to the public based on trading data of listed companies’ shares. While advising the general public not to interact with such sites, the regulator added that users transacting on these illegal platforms will do so at their own “risk, cost and consequences.”

“Participation in unauthorized schemes including sharing of confidential and personal trading data is at your own risk, cost and consequences as such schemes/platforms are not registered with SEBI. SEBI expresses this caution by advising investors not to engage in investment or trading activities through unregistered intermediaries/web/platforms/applications,” it said.

Urging investors to invest in the securities markets only through registered platforms, the regulator added that such fantasy gaming and virtual trading platforms violate the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992.

The report also notes that users of such sites will not be able to take advantage of any investor protection benefits provided by the regulator’s existing grievance and dispute resolution mechanisms.

Notably, this is not the first time that SEBI has flagged such platforms. Back in 2016, he issued a circular banning leagues and competitions with cash prizes associated with the securities markets.

The guidelines come at a time when the central government is cracking down on illegal online betting platforms that lure users with promises of high returns and prizes.

In August of this year there were reports that The Enforcement Directorate (ED) investigated more than two dozen offshore gaming platforms for transfer and refund. In March, the Ministry of Information and Broadcasting (MIB) has banned social media influencers from promoting or advertising offshore online betting and gaming platforms.

Earlier this year, the instant messaging platform Telegram has also been under scrutiny by the Indian government. on charges of extortion and gambling.