The Securities Exchange Bureau of India (SEBI) is considering a ban on trading tips which are circulated on bulk SMS and emails. It also considered clamping down on games, competitions and leagues relating to the stock market. The markets regulator said it would come out with a consultation paper on the website, it informed in a circular.
SEBI added that it would place restrictions on the above activities under the advertising code and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
Earlier in August, SEBI had issued a warning to investors to not participate in leagues,schemes, competitions and games related to securities markets. Under such schemes, contestants have to pick a stock, currency or commodity and predict the increase or decrease price in a time frame.
“Participation in such schemes including sharing of confidential and personal trading data is at investors’ own risk, cost and consequences as such schemes are neither approved nor endorsed by SEBI / SEBI recognized Exchange(s),” the circular said.
Companies such as the Indian Trading League (endorsed by cricketer Kapil Dev) and Stock Race(promoted by Satyug Gold Private Ltd.) are some of the companies running contests and offers investors prizes up to Rs 10 lakh. Stock Race, on the other hand, has prizes which include Mercedes Benz cars, Harley Davidson bikes, Apple products and gold coins.
Electronic private placement platform
At the same time in August, SEBI cautioned investors about online platforms which facilitate fund raising through private placement with companies. It added that such deals are in contravention of the provisions of Securities Contract (Regulation) Act, 1956 (SCRA) and the Companies Act, 2013.
“Only recognized stock exchanges provide a platform where equity and other securities issued by companies are listed and traded in accordance with the provisions of the SCRA,” it added.