The Securities and Exchange Board of India (Sebi) on Wednesday issued a fresh warning to investors regarding transactions in unlisted securities of public limited companies conducted through unauthorised electronic platforms and websites. According to reports from ET Now, the regulator cautioned investors about the risks involved in conducting any transactions or sharing sensitive personal details on such platforms, as these platforms are neither authorised nor recognised by Sebi. The advisory comes at a particularly critical time when investor interest in unlisted shares has risen sharply, particularly ahead of the anticipated initial public offering (IPO) of the National Stock Exchange (NSE), one of the most actively traded unlisted stocks in the country. In a statement, Sebi reiterated its earlier advisories issued in December 2024 and August 2016, warning investors against conducting transactions or sharing personal information on such platforms.
Sebi has explicitly warned that investors transacting on unauthorised platforms will have no access to regulatory safeguards. According to The Economic Times, the regulator cautioned that because these platforms operate outside its regulatory purview, any disputes arising from transactions on them will leave investors completely stranded. The regulator emphasised that users of these platforms will not have access to investor protection benefits and grievance redressal mechanisms, highlighting the significant risks investors face when engaging with unauthorised platforms. As per Sebi's latest statement, investors dealing through such platforms will not have access to "benefits of investor protection under SEBI/Exchange(s) jurisdiction" and may also not be able to use the "investor grievance redressal mechanism administered by Exchange(s) or the online dispute resolution mechanism administered by Exchanges/Depositories." This warning underscores the critical importance of investing only through recognised stock exchanges, as only recognised stock exchanges are authorised to provide a platform for fund-raising and trading in securities.
Sebi noted that such platforms continue to operate and facilitate trading in unlisted stocks despite previous warnings. As reported by ET Now, the regulator had earlier issued similar cautions in December 2024 and August 2016, advising investors against conducting any transactions or sharing personal details on such platforms. However, these unauthorised platforms continue to operate and facilitate trading activities in the unlisted securities market, with the regulator specifically noting that certain electronic platforms and websites are facilitating transactions and trading in unlisted securities of public limited companies. The regulator has come across certain online platforms facilitating transactions in unlisted securities of public limited companies, exposing investors to significant risks. According to Sebi's latest statement, the regulator has noticed certain platforms facilitating transactions in unlisted securities but clarified that such platforms are not approved or recognised by Sebi.
Sebi has reiterated that investors should rely only on authorised market infrastructure when dealing in securities. As per Sebi's latest statement, the regulator emphasised that only recognised stock exchanges are authorised to provide a platform for fund raising and trading in securities. Before investing in unlisted shares, investors should check the platform's regulatory status, understand the risks involved, and avoid being influenced only by promises of high returns or early access to private company shares. The regulator has previously red-flagged unauthorized virtual trading platforms offering fantasy games or paper trading, alongside unregistered online portals pushing unlisted debt securities. This comprehensive approach demonstrates Sebi's commitment to protecting investors from unregulated investment opportunities that may promise high returns but lack proper regulatory oversight.
