Markets regulator Sebi on Monday reiterated that dabba trading is illegal and cautioned investors to remain vigilant and not deal with any entity offering illegal trading services.
In market parlance, dabba trading refers to illegal and unregulated off-market trading that operates outside the purview of recognised stock exchanges and regulatory oversight.
Such activities pose significant risks to investors and are in violation of various provisions of the Securities Contracts (Regulation) Act, 1956 (SCRA), the Sebi Act, 1992, and the Bhartiya Nyay Sanhita, 2023, Sebi said in a statement.
“It is reiterated that dabba trading is illegal, and Sebi is committed to safeguarding investor interests through regulatory enforcement, awareness, and coordination with law enforcement agencies. Investors are advised to remain vigilant and not to deal with any entity offering illegal trading services,” the regulator said.
The statement came after the Securities and Exchange Board of India (Sebi) took serious note of an advertisement promoting dabba trading activities published in a daily newspaper last week.
Following the advertisement, Sebi, along with NSE, has taken several actions.
Sebi issued a formal communication to the newspaper, expressing concern over the publication of an advertisement that encourages unlawful trading practices and potentially misleads investors.
A complaint has also been lodged with the cyber police, seeking appropriate legal action against the entity and other entities involved, the regulator said.
Also, the matter has been brought to the attention of the Advertising Standards Council of India (ASCI) to assess violations of advertising standards and ensure appropriate corrective steps, it added.
Additionally, the National Stock Exchange (NSE) issued an investor caution alerting the public about this specific instance and the entities involved, reiterating the dangers of engaging in dabba trading.
The caution highlighted that investors should only trade through Sebi-registered brokers and recognised stock exchanges. PTI
