NSE issues warning notice to investors against dabba trading

In an NSE communication, the stock exchange in separate notices mentioned two names – Narendra V Sumaria and Nitin Shantilal Nagda – who are offering dabba trading.

The NSE notice said, “Investors are warned and advised not to subscribe to any such scheme/product offered by any new person providing illegal dabba trading activity in the stock market, because it is prohibited by law.”

Read also: NSE warns investors about dabba trading; details here

Adding more, NSE said that the association/registration as AP of the designated person was subsequently cancelled.

“It may also be noted that the above mentioned person was associated / registered with a Trading Member (TM) as an Authorized Person (AP) and the said association / registration as an AP was subsequently canceled by the TM was gone,” NSE said in its communication.

As per the details, dabba trading is a form of informal trading that takes place outside the purview of stock exchanges like BSE and NSE, and hence was said to be illegal in India.

Traders, in dabba trading, place bets on stock price movements without actually transacting. This results in no physical ownership of a particular stock compared to being done on an exchange.

In addition, dabba trading also comes under the purview of Section 406, 420 and Section 120-B of the Indian Penal Code, 1870, for violating securities laws.

NSE in its notice said that participation in such illegal platforms is at the investor’s own risk, cost and consequences as such illegal trading platforms are neither approved nor endorsed by the exchange.

NSE said, “Investors may note that none of the following remedies shall be available to investors for any dispute relating to such restricted schemes: 1. Benefits of investor protection under the jurisdiction of the Exchange; 2. Exchange Dispute Resolution Mechanism; and 3 Investor Grievance Redressal Mechanism administered by the Exchange.”