Sebi cautions investors against dealing with foreign trading portals

Sebi said investors dealing with recognised stock exchanges in India have the options such as dispute resolution mechanism and investor grievance redressal mechanism

Sebi on Tuesday cautioned investors against dealing with foreign trading portals or platforms. The regulator said domestic investors are being drawn into online trading by overseas websites and platforms. Sebi said as these websites are not being supervised by any regulatory body in India, investors need to be cautious when it comes to dealing with them.

“The inherent complexity of the products offered by such firms, web-portals, platforms may not suit the risk profile of the investors and their excessive leverage can result in significant losses to investors,” Sebi said.

“All investors are cautioned to avoid participating in such unregulated web portals or entities offering transactions in securities (including derivatives) which are executed or undertaken on the terminal of foreign exchanges or platforms,” it added.

Sebi said investors dealing with recognised stock exchanges in India have options such as dispute resolution mechanism and investor grievance redressal mechanism.

The regulator has cautioned that investors will not have any such recourse when it comes to dealing with foreign portals.

Market players say there have been growing instances of overseas websites offering financial trading to Indian clients. Such firms use various means of communications such as electronic messages, online advertisements, emails and apps.

“…also many such entities, portals offer free online registration without complying with the basic know your customer (KYC) procedures and often offer high level of leverage, low brokerage and other incentives for trading on overseas platform/exchange,” said the Sebi release.