MUMBAI: A week after warning the public against buying gold through unregulated digital platforms or digital gold being offered by various players, the markets regulator Sebi has cautioned against dealing with unregulated online bond platforms which sell unlisted debt securities.
“It has been observed that certain entities, including fintech companies and stock brokers, are offering services in the nature of online bond platform providers (OBPPs) without obtaining due registration from stock exchanges as mandated in Sebi in November 2022. These unregistered platforms lack regulatory or supervisory oversights and do not provide for any mechanisms for investor protection or grievance redressal,” Sebi said Wednesday in a public statement.
The activities undertaken by such unregistered online bond platforms may potentially be in violation of the Companies Act, 2013, the Sebi Act, 1992, and other regulations, it added. This comes a year after a similar warning in November 2024.
“Investors are urged to exercise caution and avoid transacting on unregistered online bond platforms. Investors should verify the registration status of the OBPPs prior to transacting, and deal only with Sebi-registered entities, so as to safeguard their interests,” Sebi said.
In November last year, Sebi had said “such platforms appear to provide an avenue for investors to acquire unlisted debt securities. These platforms are not subject to any regulatory or supervisory oversight, and lack basic investor protection or investor grievance redress mechanisms."
The last Sebi circular further said, "This violation occurs because offering unlisted securities to more than 200 investors makes it a “deemed to be public issue” under Companies Act. These activities could result in legal, regulatory or enforcement action against those involved in such activities."
Last November, Sebi had also banned three unregistered online bond platforms -- altGraaf, Tap Invest and Stable Investments -- from selling securities.
The regulator further said any disputes arising from transactions done over unregulated/unregistered platforms will not have the recourse available to transactions done through regulated entities.