Sebi cautions investors against fraudulent trading platforms offering stock mkt access via FPI route

Subject: Economy

Section: Financial market

Context:

Capital markets regulator Sebi has cautioned investors against fraudulent trading platforms, claiming to facilitate stock market access to Indians through Foreign Portfolio Investors (FPIs) route.

More on news:

The cautionary statement came after Sebi received a number of complaints regarding fraudulent trading platforms.

Key findings:

Sebi noted that fraudsters are enticing victims through online trading courses, seminars, and mentorship programs in the stock market.
Under the rule, FPI investment route is unavailable to resident Indians, with limited exceptions as outlined in the Sebi’s FPI Regulations.
There is no provision for an “Institutional Account” in trading, and direct access to the equities market requires investors to have a trading and demat account with a Sebi-registered broker and depository participant respectively.
SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.

About Foreign portfolio investment (FPI):

Foreign portfolio investment (FPI) refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange.
This type of investment is at times viewed less favorably than direct investment because portfolio investments can be sold off quickly and are at times seen as short-term attempts to make money, rather than a long-term investment in the economy.
Portfolio investments typically have a shorter time frame for investment return than direct investments.