Sebi Warns: Avoid Risky Social Media Live Trading Strategies

The Securities and Exchange Board of India (Sebi) has issued a stern warning to investors regarding “live trading strategies” and “real-time strategies” proliferating on social media platforms. The market regulator noted that these sessions often involve unregistered investment advisory services, posing significant risks to individuals seeking guidance.

Understanding the Unregistered Advisory Threat

Sebi observed that certain individuals present themselves as market experts, offering real-time tips for stock market positions through live sessions. These sessions provide detailed analysis and strategies, influencing investment decisions.

• These individuals claim to trade in real time, showcasing their performance and market patterns based on live data.
• They specify when to invest, when to exit, and suggest positions on market indices.
• A substantial number of people view these live trading sessions, where live chats facilitate the exchange of alleged unregistered advisory services.

Sebi’s Regulations on Market Data Use

The regulator highlighted its existing circular from May, which clearly outlines rules for sharing market price data. These regulations aim to protect investors and ensure transparency in financial education.

• Market price data for investor education and awareness activities can only be shared with a lag of 30 days.
• No monetary incentive is permitted for participants in such educational activities.
• Entities focused solely on education must not use market price data from the preceding thirty days, indicate future prices, or offer specific advice or recommendations.
• Live market data sharing is restricted to purposes related to the orderly functioning of the securities market or to fulfill regulatory requirements.

Investor Vigilance: Dealing with Registered Intermediaries

Against this backdrop, Sebi strongly advised investors to exercise extreme caution and not place trust in claims made by persons offering live or real-time trading strategies on social media. Investors should refrain from making decisions based on these sessions.

The regulator urged individuals to conduct transactions only with Sebi-registered intermediaries. Remaining vigilant in the securities market and avoiding reliance on unregistered persons or entities for investment advice is paramount for investor safety.