Unregistered Online Platforms: Market regulator Securities and Exchange Board of India ( SEBI ) has alerted the general public about non-registered online platforms in a new circular. These are the platforms that are offering unlisted debt securities to investors. SEBI has warned that these platforms do not come under any regulatory or monitoring and lack basic investor protection or investor grievance redressal mechanisms. SEBI advised the public to be cautious in transacting on such non-registered platforms.

is a violation of the rules

"The activities carried out by non-registered online platforms or issuers of non-listed debt securities violate the Companies Act, 2013, the SEBI Act, 1992, the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, and the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021," SEBI said in the notice.

This violation occurs because offering non-listed securities to more than 200 investors is “deemed to be a public issue” under the Companies Act, 2014. SEBI said that these activities may result in legal, regulatory, or enforcement action against those involved in such activities.

What should investors do?

In the notice, SEBI has advised investors to consider using online bond platforms operated by SEBI registered stock brokers authorized by the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) to act as Online Bond Platform Providers (OBPPs) for investing in Listed Debt Securities.