The Securities and Exchange Board of India has issued a strong warning regarding the risks associated with unregulated opinion trading platforms, cautioning investors that such platforms operate outside its oversight and offer no legal protection under securities laws. The advisory highlights the growing number of online platforms that allow users to place trades based on the outcome of yes-or-no events, including predictions on sports results or political decisions.
SEBI noted that these platforms often use financial terminology such as “profits,” “stop loss,” and “trading,” misleading users into believing they function as legitimate investment platforms. However, the regulator clarified that opinion trading does not fall under its jurisdiction since the transactions do not involve securities as defined by Indian law. Consequently, investors using these platforms are not eligible for safeguards available in regulated financial markets.
The regulator also emphasized that opinion trading platforms are not recognized stock exchanges and are neither registered nor monitored by SEBI. If any of these platforms engage in trading activities that fall within the definition of securities, they would be deemed illegal, and strict regulatory action may be pursued against them. Additionally, SEBI has directed recognized stock exchanges to take necessary measures if they detect violations linked to such platforms.
SEBI underscored that opinion trading, despite claims of skill-based engagement, resembles gambling due to its reliance on unpredictable binary outcomes. Investors were urged to exercise caution and avoid being misled by the financial-sounding language or promises of quick returns promoted by these platforms. The regulator’s warning serves as an effort to protect the public from financial risks associated with unregulated online trading activities.
