Should Investors Beware of ‘Opinion Trading Platforms’?

Mumbai, April 30 (NationPress) The Securities and Exchange Board of India (SEBI), which regulates capital markets, has issued a stern caution to the public against engaging with opinion trading platforms. These platforms function beyond the scope of its regulatory authority and provide no protections for investors as per securities laws.

In its advisory, SEBI highlighted that certain online platforms, termed 'opinion trading platforms', permit users to trade on the outcomes of yes-or-no events.

The payouts hinge on whether specified events occur. For instance, users might place trades on whether a sports team emerges victorious, or if a particular political choice is made.

These platforms frequently utilize financial jargon such as 'profits', 'stop loss', and 'trading', creating a misleading impression of legitimacy, SEBI noted.

"Certain platforms identified as 'Opinion Trading platforms' allow users/participants to engage in trading arrangements where the payout is contingent on the outcome of a yes/no proposition regarding the occurrence of an event," the market regulator remarked.

However, SEBI clarified that opinion trading is not governed by its regulatory framework, as the items being traded are not classified as securities under Indian legislation.

Consequently, participants on such platforms cannot access any investor protections or legal safeguards that are applicable to regulated securities markets.

"Investors/participants should recognize that there will be no investor protection measures within the securities market framework for such investments/participation," the regulator further advised.

SEBI also emphasized that these platforms are not recognized stock exchanges and lack registration or oversight by the market authority.

If any of the opinions being traded qualify as securities, such transactions will be deemed illegal, and strict measures may be enforced against the involved platforms.

Regulated stock exchanges have also been instructed to take necessary actions if they identify such violations.

This warning seeks to inform the public that SEBI does not oversee these platforms, and any investments made therein are entirely at the investor's risk.

SEBI pointed out that despite claims from some platforms of promoting skill-based involvement, opinion trading resembles gambling more closely. This is due to its unpredictable outcomes and binary decision-making nature.

The regulator urged investors to remain vigilant and not be deceived by financial terminology or promises of rapid returns on such platforms.