SEBI bans real time virtual trading apps over concerns of investor risk and ‘Dabba Trading’ practices

SEBI is banning virtual stock trading apps offering real-time data and financial rewards, citing concerns over investor protection and the resemblance to illegal "dabba trading."

By: MD IJAJ KHAN
| Updated on: May 29 2024, 07:07 IST
Cybercrime in India in 2023: WFH scams and Illegal lending apps top list, reveals I4C report
SEBI bans real time virtual trading apps over concerns of investor risk and ‘Dabba Trading’ practices
1/5 According to the Indian Cybercrime Coordination Centre (I4C), in 2023, the highest number of reported cybercrimes were related to Work from Home (WFH) or Part-time job scams. CEO Rajesh Kumar emphasized the prevalence of digital advertising, online messengers, and bulk SMS as common channels used by fraudsters. (unsplash)
image caption
2/5 Illegal lending apps ranked second in contributing to cybercrimes, with a focus on operations in countries like China, Cambodia, and Myanmar. The Indian government has taken measures to block 595 suspicious apps and has whitelisted 395 instant loan apps approved by the RBI. (unsplash)
image caption
3/5 Customer Care Number and Android malware emerged as the third-largest source of cyber fraud. Scamsters often use fake customer care numbers or install Android malware to steal sensitive information, including OTPs. (unsplash)
image caption
4/5 Impersonation and sextortion are two widely employed tactics by cybercriminals. While Work from Home scams dominate reported cases, sextortion, primarily operated from Mewat, remains underreported due to victims' reluctance to complain. (unsplash)
image caption
5/5 CEO Kumar highlighted the challenge of sextortion cases, revealing that approximately 19,000 such incidents were reported in the past year. The prevalence of sextortion, coupled with victims' hesitancy to report, poses a significant concern for authorities combating cybercrimes. (unsplash)
SEBI bans real time virtual trading apps over concerns of investor risk and ‘Dabba Trading’ practices
icon View all Images
SEBI bans virtual trading apps offering real-time stock data and financial rewards to protect investors. (REUTERS)

The Securities and Exchange Board of India (SEBI) is taking decisive action against the rising popularity of virtual stock trading apps. These apps, which have gained significant traction amid increased interest from retail investors, allow users to create simulated portfolios and compete based on real-time stock prices. SEBI, however, has expressed concerns over the potential risks these apps pose, especially when real-money rewards are involved.

Reasons Behind the Ban

SEBI's primary concern is the resemblance of these activities to "dabba trading," an illegal practice involving the placement of orders through unauthorised channels. By cutting off access to real-time market data for these virtual trading apps, SEBI aims to prevent users from developing unrealistic expectations about the stock market or engaging in risky behaviours based on their virtual performance.

You may be interested in

MobilesTablets Laptops
4% OFF
Samsung Galaxy S24 Ultra
  • Titanium Black
  • 12 GB RAM
  • 256 GB Storage
Vivo X100 Pro 5G
  • Asteroid Black
  • 16 GB RAM
  • 512 GB Storage
7% OFF
Apple iPhone 15 Pro Max
  • Black Titanium
  • 8 GB RAM
  • 256 GB Storage
17% OFF
Xiaomi 14 Ultra
  • Black
  • 16 GB RAM
  • 512 GB Storage

Also read: YouTube makes videos skip to end for ad-blocker users, prompting frustration among viewers

Also read
Looking for a smartphone? To check mobile finder click here.

The regulator has instructed stock exchanges and depositories to cease providing real-time price data to third-party apps. This move effectively disables the data feeds that power these virtual stock games. It's important to note that this directive specifically targets apps offering financial rewards or gamifying real-time stock movements. Apps focused on education or entertainment, using historical or delayed data, are expected to remain unaffected.

Also read: Netflix app for Windows may disable download option for offline viewing- Check details

Implications for Users and Developers

The future of virtual stock trading games in India is now uncertain. Developers will need to modify their apps to comply with SEBI's regulations, potentially shifting to non-real-time data or emphasising educational content over competitive elements. Users who enjoyed these apps for entertainment may need to seek alternatives, while those looking for financial rewards will have to look elsewhere.

Also read: Instagram might soon let users try new features early, including AI chat themes: Here's what to expect

This crackdown underscores the evolving regulatory landscape surrounding financial apps and the gamification of stock trading. While virtual stock games can be a valuable tool for learning about the market, SEBI's primary focus is on protecting investors. This regulatory move might spur developers to create more educational and responsible financial gaming experiences going forward.

Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 28 May, 13:41 IST
Tags:
NEXT ARTICLE BEGINS