NSE warns investors about illegal dabba trading services

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NSE dabba trading warning

Highlights

NSE has filed a police complaint against 'Ankit' and the Facebook page 'DABBA TRADING INDIA' for offering dabba trading services.
Upon conviction under Section 23(1) of the Securities Contracts Regulation Act, 1956, a maximum penalty of 10 years imprisonment or a fine of up to ₹25 crore is possible.
NSE warned investors that trading on illegal platforms will not provide access to the exchange’s dispute resolution and grievance redressal benefits.

This article was translated from the original. Read the original version by our correspondent here.

Warning, Complaint, and Legal Provisions

According to the National Stock Exchange of India, a person named “Ankit” using the mobile number “7310892297” and a Facebook page called “DABBA TRADING INDIA” is allegedly offering dabba, i.e., illegal, trading services to investors. The exchange clarified that neither the individual nor the entity providing such services is registered as a member or as an authorized person of any registered member.

The exchange has filed a police complaint in this matter and advised investors to verify the legitimacy of any scheme or product related to the stock market before participating. For this, the exchange has provided the “Know/Locate your Stock Broker” facility on its website, where details of registered members and their authorized persons can be checked.

The exchange stated that prosecution may be initiated for violations of relevant provisions under Section 23(1) of the Securities Contracts Regulation Act, 1956. Upon conviction, penalties may include up to 10 years imprisonment, a fine of up to ₹25 crore, or both. Additionally, under Section 25, such offenses are cognizable and can also be investigated by state law enforcement agencies.

The exchange also highlighted that Sections 316, 318, and 61 of the Bharatiya Nyaya Sanhita, 2023 may also apply to dabba trading. This indicates that the matter is not limited to violations of securities laws but may also fall under broader criminal investigations.

Risks for Investors and Market Impact

NSE has strongly advised investors not to trade on such illegal trading platforms, stating that participation is entirely at the investor’s own risk, cost, and consequences. The exchange clarified that such platforms are neither approved nor supported by it.

A major risk for investors is that formal relief mechanisms of the exchange will not be available in disputes arising from such prohibited setups. This means that the exchange’s dispute resolution system and investor grievance redressal mechanism cannot be availed in such cases.

This warning underscores the importance of compliance checks for retail investors, especially at a time when the promotion of trading services via social media and informal networks is on the rise. Engaging with any service without verifying registered brokers and authorized intermediaries can increase both regulatory and financial risks.

Our previous report discussed NSE’s warning regarding alleged illegal dabba trading services being offered through a Facebook page named “Dabba Trading Brokers” and the filing of a police complaint. That article also clarified that investors on such unauthorized platforms do not get the exchange’s regulatory protection, dispute resolution, or grievance redressal facilities, making it essential to verify brokers/authorized persons using the ‘Know/Locate your Stock Broker’ feature.

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