NSE issues investor warning over illegal dabba trading services

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NSE’s dabba trading warning

Highlights

NSE issued an investor warning after filing a police complaint against a Telegram channel named 'Dabba Traders Since 2016' for allegedly offering illegal dabba trading services.
Under Section 23(1) of the Securities Contracts Regulation Act, 1956, those found guilty may face up to ten years’ imprisonment, a fine of up to ₹250 crore, or both.
NSE clarified that investors trading on illegal platforms will have access to neither a regulated dispute resolution mechanism nor investor grievance redressal.

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

Action against the Telegram channel and legal warning

As reported by the National Stock Exchange of India Limited, a Telegram channel named “Dabba Traders Since 2016” is offering investors dabba trading, or illegal trading services. The exchange has filed a police complaint in the matter and warned investors not to subscribe to any such scheme or product offered by any person or entity in the stock market, as it is prohibited by law.

NSE has asked investors to verify registered members and their authorized persons using the “Know/Locate your Stock Broker” facility available on its website. The exchange clarified that such illegal trading platforms have not received its approval or endorsement, and participation in them will be entirely at the investor’s own risk, cost, and consequences.

Risks for investors and limits of available redress

Under Section 23(1) of the Securities Contracts Regulation Act, 1956, any person, entity, or social media channel that violates Sections 13, 16, 17, or 19 may be prosecuted. Upon conviction, penalties may include imprisonment of up to ten years, a fine of up to ₹250 crore, or both.

The exchange also said that its dispute resolution mechanism or investor grievance redress mechanism will not be available to investors for any disputes involving such prohibited arrangements. This indicates that investors trading on unauthorized platforms face not only legal and financial risks but also limited institutional protection.

Our previous report highlighted NSE’s warning regarding alleged dabba trading offerings, including a police complaint over activities linked to Haresh Chaudhary and Perfect Trading. That article advised investors to verify registered brokers/authorized persons using the “Know/Locate your Stock Broker” tool, understand the potential severe penalties under the SCRA, 1956, and recognize that the exchange’s grievance redress and dispute resolution mechanisms are unavailable in the event of disputes on such unauthorized platforms.

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