The National Stock Exchange (NSE) on recently issued cautionary notices to investors, advising to stay away from dabba or illegal trading on the exchanges.
Key points
- Dabba trading is a form of informal trading which takes place outside the purview of the stock exchanges like BSE and NSE.
- It is an illegal trading activity in India.
- Traders, in Dabba trading, bet on stock price movements without a real transaction. This results in no physical ownership of a particular stock in comparison to when it is done on an exchange.
- For being violative of the securities laws, dabba trading also falls within the purview of Section 406, 420 and Section 120-B of Indian Penal Code, 1870.
- 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.
