SEBI Warns Against Trading in Unlisted Securities on Unauthorised Platforms

The Securities and Exchange Board of India (SEBI) has issued a warning urging investors to avoid dealing in unlisted securities on unauthorised electronic platforms.

SEBI’s press release emphasised that these unauthorised platforms operate in violation of the Securities Contracts (Regulation) Act, 1956 and the SEBI Act, 1992. Both acts are designed to protect the interests of investors and ensure transparency in the securities market.

Advisory to Investors

SEBI has advised investors to refrain from engaging in transactions on these unauthorised platforms. The regulator has also cautioned individuals against sharing sensitive personal details with these platforms, which may compromise their privacy and security.

Recognised Platforms for Securities Trading

The regulator clarified that only recognised stock exchanges are authorised to provide platforms for trading in the securities of both “to-be-listed” and “listed” companies. A comprehensive list of SEBI-recognised stock exchanges is available on the SEBI website for investor reference.

Investors who engage in trading on unauthorised platforms face the risk of losing various protections, including investor protection benefits, grievance redressal mechanisms, and online dispute resolution services typically provided by recognised exchanges or depositories.

SEBI’s Previous Warnings

SEBI has previously cautioned the public about engaging with unauthorised trading platforms through press releases, including one in August 2016 and more recently, regarding unregistered online platforms offering unlisted debt securities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.