Market Regulator SEBI Cracks Down on Dabba Trading, Advises Caution to Investors

SEBI issued an advisory on July 22, 2025, warning investors against dabba trading after an unregistered entity published a full-page ad in a Hindi newspaper, Navbharat, on July 13, 2025. The ad promoted illegal trading services, offering high margins and no documentation requirements.

Illegal and unregulated

Dabba trading involves off-market transactions that are not routed through official stock exchanges. Such trades are settled internally and fall outside regulatory oversight, leaving investors without access to stock exchange protections or grievance redressal.

SEBI stated that dabba trading violates multiple laws, including the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, and the Bhartiya Nyay Sanhita, 2023. These provisions are meant to ensure transparency, investor protection, and lawful trading activity.

Entity named in report

According to reports, the entity behind the ad operates under the name 'Trade Dost' or 'Close Friend Traders'. The matter was taken seriously after a report by NDTV Profit highlighted the issue. SEBI has filed a complaint with the cyber police and has also alerted the National Stock Exchange.

Complaints and notices issued

SEBI has approached the cyber police for legal action against the company and others involved. A formal notice was also sent to the newspaper that carried the ad. The matter has been reported to the Advertising Standards Council of India (ASCI) to assess possible breaches of advertising norms.

Since dabba trading bypasses official platforms, there is no guarantee of trade execution or resolution in case of disputes. Investors engaging with such platforms risk losing their money without legal remedy.

SEBI has asked all media platforms to conduct due diligence before accepting advertisements related to financial services or products. The regulator noted that misleading ads can encourage illegal activity and expose investors to harm.

Read More: SEBI Rolls Out Centralised Compliance Reporting for Brokers from August 1!

Conclusion

SEBI’s advisory aims to restrict unregulated trading practices and alert the public. Investors have been asked to avoid such services and verify the credentials of any trading platform or intermediary.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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