The Securities and Exchange Board of India (SEBI) has said that some platforms known as ‘Opinion Trading platforms’ provide their users/participants a platform to trade in arrangements wherein the payout is dependent on the outcome of a yes or no proposition of the happening or non-happening of the underlying event.

SEBI further noticed that 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.

In view of the above, investors are advised to note that, in general, opinion trading does not fall within the regulatory purview of SEBI, as what is traded is not a security. Investors as well as participants should be aware that no investor protection mechanism under the securities market purview shall be available for such investment/participation, said SEBI.

Since none of the platforms providing opinion trading can qualify to be recognised stock exchanges, and are neither registered nor regulated by SEBI, any trading of securities on them is illegal. Such platforms are liable to face action for violation in that case.

SEBI advised that recognised stock exchanges should initiate appropriate action for such violations. Even in this case, investors/participants are made aware that none of the investor protection mechanisms shall be available as their trades will not be on a recognised stock exchange.

The purpose of this press release is to create awareness about the role of SEBI with respect to opinion trading platforms.