SEBI flags opinion trading platforms: Betting disguised as investing? Here's what they are and why they're risky

Capital markets regulator SEBI on Tuesday warned investors against engaging with so-called 'opinion trading platforms', saying such platforms operate outside its regulatory purview and do not offer any investor protection mechanism.

What are 'opinion trading platforms’?

Opinion trading platforms allow users to take positions based on the outcome of binary events, for example, a yes/no proposition of happening or not happening of the underlying event.

On these platforms, payouts depend on whether the predicted event occurs. If their prediction is accurate, they get a payout and vice versa.

Probo, MPL Opinio, PlayerzPot, Real11 and Big Cash are among the popular opinion trading platforms in India, according to The Economic Times.

SEBI noted that some of these platforms use financial market terminology such as “profits”, “stop loss”, and “trading”, which could mislead users into believing they are legitimate investment avenues akin to stock or derivative trading.

Not under SEBI’s regulatory purview

The regulator cautioned investors that, in general, opinion trading does not fall within its regulatory purview, as what is traded is not security.

“Investors/participants should be aware that no investor protection mechanism under securities market purview shall be available for such investment/participation,” SEBI said.

The regulator further warned that none of these platforms providing opinion trading can qualify to be recognised stock exchange, and are neither registered or regulated by Sebi, and any trading of securities on them is illegal (in case some of the opinions traded qualify as security).

It added that these platforms could be subject to enforcement action for regulatory violations, and stock exchanges have been advised to initiate appropriate action for such violations.

The advisory comes amid a growing number of unregulated digital platforms offering speculative bets disguised as investment products. SEBI said the advisory aims to create awareness about the role of SEBI with respect to opinion trading platforms.