The Securities and Exchange Board of India (SEBI) has issued a fresh caution to investors regarding the buying and selling of unlisted public company shares through unauthorised electronic platforms and websites. The market regulator warned that such platforms are neither recognised nor regulated under its framework and may expose investors to significant financial risks.
In an official statement released on Wednesday, SEBI said it has observed the emergence of multiple digital platforms and websites facilitating transactions in unlisted securities of public limited companies. The regulator reiterated that only recognised stock exchanges are legally authorised to provide platforms for fund-raising and trading in securities in India.
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SEBI emphasised that any trading activity outside this regulated ecosystem falls beyond its supervisory control. The regulator stated, “It is to reiterate that only recognised stock exchanges are authorised to provide a platform for fund raising and trading in securities,” underlining the legal position governing securities transactions in the country.
According to SEBI, investors participating in such unauthorised platforms may unknowingly expose themselves to serious risks, including fraud, misrepresentation of asset value, and lack of transparency in pricing and settlement mechanisms. The regulator highlighted that these platforms operate without adherence to established disclosure norms and investor protection standards.
The warning also points to the absence of regulatory safeguards that are otherwise available under SEBI’s framework. Investors using recognised exchanges benefit from structured grievance redressal mechanisms operated by stock exchanges, as well as the Online Dispute Resolution (ODR) system jointly managed by exchanges and depositories. However, such protections do not extend to transactions conducted on unregulated platforms.
SEBI advised investors not to undertake any securities-related transactions or share sensitive personal or financial information on such websites or applications. It also reminded market participants that similar advisories had been issued earlier, including in December 2024 and August 2016, cautioning against unauthorised virtual trading platforms and unregistered schemes involving unlisted securities and debt instruments.
The regulator further stressed the importance of due diligence before engaging in any investment activity. Investors have been urged to verify whether a platform is officially recognised before initiating transactions. SEBI has also made it clear that the list of recognised stock exchanges is publicly available on its official website for verification purposes.
Market observers note that interest in unlisted shares has grown in recent years, particularly among retail investors seeking early exposure to companies prior to their public listing. However, SEBI’s repeated warnings indicate concerns about parallel markets developing outside the regulatory perimeter, where price discovery and settlement processes may not be transparent or reliable.
The regulator’s advisory comes amid increasing digitisation of financial markets, where online platforms and mobile applications have made access to investment products easier but have also raised concerns over unregulated intermediaries. SEBI’s intervention aims to reinforce the boundaries of legally permissible trading infrastructure and protect investors from potential misuse of their funds.
SEBI also reiterated that investors dealing through unauthorised platforms will not be eligible for any investor protection mechanisms available under its regulatory system. This includes dispute resolution frameworks and compensation-related safeguards typically available through registered market institutions.
The warning serves as a broader reminder of the risks associated with informal or semi-formal investment channels that operate outside established regulatory oversight. SEBI has urged market participants to remain vigilant and to rely only on recognised and regulated exchanges for any securities-related transactions.
The regulator is expected to continue monitoring such platforms and may take further enforcement action if violations of securities laws are detected.
