The Securities and Exchange Board of India (SEBI) has warned investors and traders about dabba trading, and the National Stock Exchange (NSE) has also come up with a similar warning recently. It all started with an advertisement about the Dabba trading app, which was given in a Hindi Daily on 13 July 2025. So, why has SEBI been warning investors about this form of trading? What is it, and why should you stay away from it? Let’s find out. 

What is Dabba Trading and how does it work?

Dabba trading is an unregulated form of trading which is usually off-the-record with no actual buying and selling of securities. The traders who take part in this form od trading bet on the price movements of the securities without actually buying or selling the securities on stock exchanges. There is a dabba operator who settles the gains and losses of the traders in cash, outside of any official channel. 

Suppose a trader anticipates that the price of Stock A will rise, so he bets the same with a dabba broker. Now, if the price of the stock rises, then the broker will pay the trader the amount of profit generated from the price difference. However, if the price falls, then the broker will gain from the trader. 

There is also another form of dabba trading where dabbed brokers connect buyers and sellers for the same stock and earn a commission. 

Let’s take an example to understand this better. Suppose a trader has placed an order to buy 100 shares of company A at ₹500 via a dabba broker. Now there is another trader with the same dabba broker who wants to sell the stock of company A, so the dabba broker connects both parties off-market for a commission. 

Dabba Trading Advertisement 

Coming to the advertisement which ignited all the fire in recent times is a full-page dabba trading ad in a Hindi Daily published on 13 July 2025. The bold-font newspaper ad promoting dabba trading, with promises of a high-margin trading facility and registration without any paperwork, made SEBI flag the same. SEBI has filed a complaint against the advertisement with the Cyber Police and also alerted the Advertising Standards Council of India (ASCI) to ban the dabba trading ad for violating rules, and necessary actions need to be taken. 

Dabba trading violates different provisions of the Securities Contracts Act, 1956, SEBI Act, 1992, and also Bhartiya Nyay Sanhita, 2023 as per SEBI. These activities pose immense threat and risk to the traders and investors in the market and thus strict actions are mandatory. 

Wrapping up 

SEBI has taken all the necessary steps from this dabba trading platform to cheat traders and investors. Investors must be aware of the form of trading falling under the purview of the SEBI’s guidelines, which are off-market and not regulated, and shouldn’t take part in any such activities. 

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.