Sebi warns against illegal opinion trading platforms

Market regulator Securities and Exchange Board of India (Sebi) has cautioned equity investors against dealing with ‘ Opinion Trading platforms’. It said that such platforms do not come under the purview of Sebi's investor protection mechanism.

‘Opinion Trading platforms’ provide their users or participants a platform to trade/enter into arrangements where the payout is dependent on the outcome of a yes/no proposition of happening or not happening of the underlying event.

Sebi noted that in some cases, opinion trading platforms are designed in a manner so as to resemble an investment platform as they use terminologies closely associated with trades in securities for instance profits, stop loss, trading among others.

Sebi said that opinion trading in general does not fall within its regulatory purview as what is traded is not security. "Investors/participants should be aware that no investor protection mechanism under securities market purview shall be available for such investment/participation," the release said.

It went on to refer it as "illegal" as no platform providing opinion trading can qualify to be recognised stock exchange and is neither registered or regulated.

"Any trading of securities on them is illegal (in case some of the opinions traded qualify as security). Such platforms are liable to face action for violation in that case," the release said.

It has also asked recognised stock exchanges like NSE and BSE to initiate appropriate action for such violations.