Fantasy share portfolio india

A blawg containing a periodic review of topics of interest in corporate and commercial law that impact India. Subscribe in a reader. Thursday, September 1, A Tricky Game: The Legality of Fantasy Trading in India. They can be reached at info suvanlaw. In recent times, the online stock trading apps and games have stirred up some controversy in the otherwise efficiently regulated realm of securities across the whole wide world.

In India, there seems to be an increasing trend of free-to-play games as well as competitions based on stock market predictions. As highlighted by Zee Business , Medianama and Times of India reports, Stock Race is one such new gaming website promoted by Satyug Gold Private Ltd. The game allows players to compete for prizes, which include Mercedes Benz cars, Harley Davidson motorbikes, Apple products and gold coins based on the one-day returns of a virtual stock portfolio.

Players have to pick a stock, currency or commodity and then predict whether in a stipulated time the price of that stock, currency or commodity will rise or fall. These types of services are set up to allow individuals to compete for prizes based on the performance of a virtual stock portfolio.

Top 5 stock trading games: Forget Candy Crush - here's how to make a million on your smartphone - Mirror Online

At the outset, people are interested in virtual stock trading games as it gives both the excitement to deal in the stock markets and the lack of serious risks attached to the stock markets, as the trading is done using virtual money and the amount charged by these gaming websites is a lot less in comparison to trading in the actual stock market. Many of them operate by margining the difference between the entry fees charged and the prizes awarded.

Some promoters of these games would argue that they are generating revenues through their creativity and innovation, without creating a systemic risk. The whole process was carried out in mock format the trades were not real because the players could not afford the real cost of trading and high commission fees. The SEC has taken the position that these fantasy stock trading programs could potentially involve security-based swaps and implicate both the federal securities and commodities laws.

According to it, online companies for fantasy stock trading could be breaking the law if they offer financial rewards for real trades, and firms offering such derivatives trading must obtain an Australian Financial Services license.

On August 30, , even the Indian capital and commodities regulator, the Securities and Exchange Board of India SEBI , issued a press release warning investors about such schemes and fund-raising on unauthorized electronic platforms. SEBI has clarified that such schemes are neither approved nor endorsed by SEBI or SEBI-recognized exchange.

Moneybhai Investor - Free Online Virtual Stock Market Trading Game, Virtual Stock Exchange & stock Games

SEBI also seems to have nudged stock exchanges to issue warnings about such games to investors. While the investors and operators of these sites may have made an analysis of general laws to claim that they are not assisting betting or wagering contracts, it needs to be appreciated that securities laws are special laws, which override the applicability of general laws.

The Supreme Court of India has recently held that SCRA is a special law to regulate the sale and purchase of shares and securities and hence it prevails over the provisions of the Indian Contract Act, and Sale of Goods Act, , insofar as the matters which are specifically dealt with by the SCRA.

There may also be a policy concern here. Such internet based games have the potential to sideline the regulated market and offer some alternatives to investors and market analysts.

Regulated trading and investing serves an underlying economic purpose in capital and commodities markets, but that may not be the case with these virtual trading games.

If they become a widespread phenomenon, it can even create a parallel, unregulated securities market. An element of trust and prudence that is available in the regulated market may be lacking in operation of gaming websites and applications.

Consideration in any form such as bitcoins, lite coins, as a signing fee or entry fee, or anything of value such as gifts, prizes, may invoke the securities laws to the exact same extent as payment in currency would. Regulators globally are known to view every innovation with a suspicious eye. It is said that the purpose of legitimate government regulation is to encourage the private business activity that is subject to the regulation.

Until that happens, SEBI has the option of using its Cease and Desist Powers under Section 11D of SEBI Act, Each gaming site and fact scenario therefore, would require a review and analysis as to whether it has invoked the SEBI Act, and Securities Contracts Regulation Act, , and has complied with such laws.

An online virtual stock market trading simulator game to learn about stock market.

No doubt, in the coming times, fantasy trading games, app or websites and their promoters will face increasing scrutiny. Posted by Umakanth Varottil at 6: International Developments , SEBI , Securities Regulation. Newer Post Older Post Home.

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