Mumbai, April 30
Capital markets regulator Securities and Exchange Board of India (SEBI) has issued a strong warning to the public against using opinion trading platforms, saying these platforms operate outside its regulatory oversight and offer no protection to investors under securities laws.
In an advisory, SEBI said that some online platforms, referred to as ‘opinion trading platforms’, allow users to trade on the outcomes of yes-or-no events.
The payout depends on whether a certain event happens or not. For example, users may place trades on whether a sports team will win, or if a particular political decision will be taken.
These platforms often use financial terms like ‘profits’, ‘stop loss’ and ‘trading’, giving the impression that they are legitimate investment platforms, SEBI added.
"Some platforms known as 'Opinion Trading platforms' provide their users/participants a platform to trade/enter into arrangements wherein the payout is dependent on the outcome of a yes/no proposition of happening or not happening of the underlying event," the market regulator stated.
However, SEBI clarified that opinion trading does not fall under its regulatory framework, because what is being traded is not considered a security under Indian laws.
As a result, users of such platforms cannot avail any investor protection or legal safeguards that apply to regulated securities markets.