NSE cautions investors against 'Dabba Trading'

The National Stock Exchange (NSE) on Monday cautioned investors against some fraudsters running illegal 'dabba trading' with guaranteed returns.

Dabba trading is an illegal form of trading in shares. Operators of such schemes allow people to trade in equity outside the stock market without demat accounts and KYC (Know Your Customer).

NSE found that the entities – Shree Parasnath Commodity Pvt Ltd, Shree Parasnath Bullion Pvt Ltd, Ferry Tail Trading Pvt Ltd and Bharat Kumar (carrying on business with the Trust), are operating Dabba or illegal trading platform with guaranteed returns. Thereafter, a statement was issued to caution investors.

The stock exchange said that these are not registered members of NSE or authorized persons of any registered member. A complaint has been lodged with the police in this regard.

Read More: What is the Dabba Trading? Is Dabba Trading Profitable?

Cautioning investors, NSE said that they should not subscribe to any such scheme or product offered by any person or entity claiming to offer guaranteed returns in the stock market. Such schemes or products are illegal. 

What is the penalty for Dabba Trading?

In India, dabba trading is prohibited, and those who engage in it face criminal charges and punishments. The Securities and Exchange Board of India (SEBI) fined Anand Rathi Share and Stock Brokers Ltd Rs 6 lakh for unauthorised trading operations. 

Dabba trading is considered gambling in India and is therefore prohibited. Dabba trading is outlawed under the SEBI Prohibition of Fraudulent and Unfair Trade Practices in Securities Market Regulations, 2003. 

Dabba trading is typically done without the customer's knowledge or agreement and may be considered fraud if the crime is found. As a result, it is not recommended to engage in dabba trading because it is unlawful and carries significant consequences.