Capital markets regulator -- Securities and Exchange Board
of India (SEBI) has warned the investors against dealing with 'opinion trading
platforms'. Sebi warning that such entities fall outside the ambit of its
regulatory oversight and offer no investor protection under the securities law
framework. In a public advisory, Sebi said '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'.
In some cases, opinion trading platforms are designed in a
manner so as to resemble an investment platform as they use terminologies such
as profits, stop loss, trading etc., terms closely associated with trades in
securities. Further, the markets watchdog advised investors to take note that
in general, opinion trading does not fall within regulatory purview of the
regulator, 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 regulator further warned that none of these platforms
providing opinion trading can qualify to be recognized stock exchange, and are
neither registered or regulated by Sebi, and any trading of securities on them
is illegal (in case some of the opinions traded qualify as security). Sebi said
that such platforms are liable to face action for violation in that case. Recognized
stock exchanges are advised to initiate appropriate action for such violations.
Even in this case investor/participants are made aware that none of the
investor protection mechanisms will be available as their trades will not be on
a recognized stock exchange. The purpose of the warning is to create awareness
about the role of Sebi with respect to opinion trading platforms.
Source: Ace Equity
