SEBI Warns Investors Against Trading Unlisted Shares On Unauthorised Platforms

Investors looking to buy or sell unlisted shares are once again being warned to be careful about where they do it. The Securities and Exchange Board of India (SEBI) has cautioned that trading unlisted shares through websites, apps, or electronic platforms without its approval can be risky.

SEBI clarified that such platforms have no recognition or approval from the regulator, and that transacting through them, or sharing personal and financial details on them, puts investors at risk.

A Repeated Warning
This isn’t the first time SEBI has flagged the issue. The regulator had already issued similar warnings in 2016 and 2024, but noted that unauthorised platforms promoting trading in unlisted company shares are still operating.

No Protection If Something Goes Wrong
SEBI reminded investors that those who invest through these platforms don’t get the protections that come with regulated markets. That means if a dispute arises, mechanisms like investor grievance redress, online dispute resolution systems, or protections offered through stock exchanges won’t apply. SEBI pointed out that only recognised stock exchanges have the legal authority to facilitate fundraising and share trading.

Pattern of Similar Warnings
SEBI has issued comparable warnings in the past against paper trading, virtual trading, and fantasy trading platforms, as well as against online debt security platforms that aren’t listed.